Objective: The 2002 Veterans Health Care Act raised medication copayments from $2 to $7 for lower priority patients. Veterans with schizophrenia constitute a multiply disadvantaged population; 40% are antipsychotic non-adherent, substantially increasing psychiatric admission risks. Certain patient sub-groups might be particularly sensitive to medication costs with significant clinical ramifications. Diverse cultural expressions of health beliefs and priorities contribute additional layers of complexity. This study examines potential inequities stemming from higher copayments. Methods: All veterans with schizophrenia were followed 33 months Pre and Post copayment increase. Longitudinal models analyzed effects of higher medication costs in copayment veterans versus a natural control group of exempt patients, controlling for demographics, substance abuse, functional status, and other comorbidities. Adjusted means compared prescription patterns and inpatient utilization among four ethnic groups: white (N=36,452), African-American (N=17,602), Hispanic (N=5,225), and Other (N=10,707). Results: African-Americans were relatively younger with higher substance abuse rates. Hispanic veterans were more likely to be unmarried and have multiple illnesses, though fewer (39%) faced copayments than other patients. Minorities filled 10-35% fewer prescriptions than white veterans, and ethnic differences were evident in pharmacy fills and inpatient days. White veterans reduced psychotropic fills 15% after the policy change, decreasing hospital days by nearly the same amount. However, minorities dropped psychotropics 19% – 22% while subsequently increasing inpatient utilization, the latter especially true for Hispanics. Conclusion: Although all veterans dramatically adjusted pharmacy use following the copayment change, ethnic minorities appeared particularly sensitive to drug costs. Similarly, while white veterans appeared to reduce psychotropic use with minimal consequences, minorities experienced substantially elevated admission risks associated with lower cost-related adherence. Benefit changes for veterans with chronic conditions should be implemented cautiously and carefully evaluated. Reconciling budgetary concerns with quality care provision requires sensitive attention to unique patient groups to ensure equity while minimizing economic and health disparities.