Dementia related psychosis (DRP), characterized by debilitating symptoms such as hallucinations and delusions, is estimated to affect 2.4M people with dementia in the US. Patients with DRP may have twice the rate of dementia progression compared to patients with no DRP. Given that dementia disproportionally impacts the elderly, a comprehensive cost of-illness analysis may add to the current understanding of the overall economic burden of DRP prevalence. The objective of this study was to estimate the cost of DRP from a Centers for Medicare and Medicaid Services (CMS) perspective.

A five state-transition Markov analysis, adapted from Green et al, was conducted to assess the annual direct DRP cost burden to CMS. Patients entering the model were allowed to transition between three at-home health-states (mild dementia plus psychosis, moderate dementia plus psychosis, severe dementia plus psychosis), one long-term care/nursing home (LTC/NH) stay, or death (absorbent health state) at any given time. Since the model accommodates tunnel health-states based on dementia, psychosis and functioning severity levels, patients stayed in the same health-state or transitioned to a more severe health-state or progressed to death (i.e., absorbent health-state) between each 30-day cycle. Prevalence, disease-severity, and state-transition probability estimates were derived from literature while direct costs of DRP were derived from a Medicare claims analysis. Costs were discounted at 3%. Model robustness was tested to check if results were sensitive to changes in inputs and assumptions.

Of the estimated 61.5M Medicare beneficiaries, about 6.87M may suffer from dementia. In the base-case scenario, an estimated total of 2.2M prevalent DRP patients enter the model based on dementia severity into one of the 4 non-absorbent health-states: three at-home (10% mild, 60% moderate, and 10% severe) and one LTC-NH (10%). Total Medicare annual direct DRP costs are estimated to be approximately $119.98B ($113.96B-$125.96B) and about $54K PPPY (Per-Patient-Per-Year) costs (2019 USD). NH costs and patient volume at higher severity levels are significant cost drivers. Sensitivity analysis results show that the model is sensitive to disease severity and disease progression.

These results suggest that DRP imposes a significant direct cost burden despite its low prevalence. In this analysis, per-patient per year (PPPY) cost of DRP prevalence was estimated to be slightly higher than incident PPPY DRP costs. These differences may be attributed to the number of patients at higher severity levels and the time spent in a severe health state as well as cost of LTC/NH stays. Especially given the ageing population in the US, DRP could become an increasing public health concern. There is a significant need for education and awareness about DRP cost burden.

Acadia Pharmaceuticals Inc.