Prior authorization of newer insomnia medications in managed care: Is it cost saving?

Rajesh Balkrishnan, Vijay N. Joish, Monali J. Bhosle, Rafia S. Rasu, Milap C. Nahata

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


Study Objectives: New pharmacotherapeutic treatment options are available to treat patients with 1 or more insomnia symptoms. However, these new pharmaceuticals are subject to a variety of managed-care tools, such as prior authorizations, that may restrict access to these medications. The objective of this study was to evaluate the economic consequences to a health plan that requires prior authorization for nonbenzodiazepine medications approved for the treatment of insomnia characterized by difficulties both falling and staying asleep. Methods: An economic model was constructed to determine the effects of a typical prior-authorization program across a hypothetical managed-care population. Model parameters were derived from national estimates and a literature review. Results: Economic consequences of a prior-authorization program were based on a hypothetical managed-care plan with 500,000 insured patients. An estimated acquisition cost of $300 per 100 tablets of medication requiring prior authorization, $40 to process each prior-authorization request, and prior-authorization rejection rates of 2% to 5% were considered. Using the default-model inputs of the hypothetical plan characteristics and costs, the economic model estimated a loss of $600,000 to $700,000 per year to the health plan. In a 3-way threshold sensitivity analysis when prior-authorization rejection rate was increased to 5%, the cost of each request in the prior-authorization program was decreased to $20, and the cost of a first-generation nonbenzodiazepine was decreased to a generic price (i.e. $100 per prescription), the model continued to show a net loss to managed care in each case. Conclusions: This model showed that requiring prior authorization for newer sleep treatments might not be a cost-saving strategy for managed-care organizations.

Original languageEnglish
Pages (from-to)393-398
Number of pages6
JournalJournal of Clinical Sleep Medicine
Issue number4
StatePublished - 15 Jun 2007


  • Costs
  • Insomnia
  • Managed care
  • Prior authorization
  • Sleep agents


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