BACKGROUND: Dementia-related psychosis (DRP), characterized by hallucinations and delusions, may accelerate the cognitive/functional decline among patients with dementia. Such declines have debilitating consequences on patients, caregivers, and society. While previous research has estimated total annual-direct DRP costs, analysis of both direct and indirect costs is important in understanding the overall societal burden of DRP.

OBJECTIVES: To estimate the societal burden and associated costs of DRP in the US population.

METHODS: A Markov model was developed to assess the societal cost burden of DRP. The five DRP health states in the model were: mild, moderate, severe, end-of-life-care, and death as an absorbent health state. Cycle length was 30-days. Societal costs were calculated as a sum of total annual direct and indirect costs. Total indirect costs included both formal (paid by Medicare, Medicaid, or LTC insurance) and informal (caregiver time and patient out-of-pocket costs) caregiver costs, respectively. Prevalence, disease-severity, transition probabilities, and costs were derived from the literature. One-way sensitivity analysis was conducted to test the model’s robustness by varying inputs and assumptions.

RESULTS: The estimated total annual-societal cost of DRP is $263B, and approximately $122B (46%) and $141B (54%) were indirect and direct costs, respectively. Of the total indirect costs, formal and informal caregiver costs including end-of-life-care costs were approximately $44.75B and $77.25B, respectively. End-of-life-care contributed $10B and $22B of the total formal and informal caregiver costs, respectively.

CONCLUSIONS: Results of this analysis demonstrate that indirect costs contribute to approximately half of the total annual societal DRP costs; with caregiver costs contributing nearly 30% of the total. Given the aging US population, in addition to direct costs, indirect costs related to the caregiver and out-of-pocket costs may impose an enormous burden on the healthcare system. Given this public health concern, better management strategies and improved therapeutic options for DRP are needed.