OBJECTIVES: To investigate whether the association between higher health care costs and delays or changes in antipsychotic drug therapy, which was found in previous one-year period study, continue to accrue over a two year period. METHODS: 1,966 patients with schizophrenia covered by the California Medicaid (Medi-Cal) program were selected. Multiple logistic regression models were estimated for the likelihood of delaying therapy and changing therapy and OLS regressions were used to estimate the cost effects of these drug use patterns in both one-year and two-year models. RESULTS: 21.1% of patients did not use an antipsychotic medication in the first year and 17.6% were untreated for two years. As before, treated patients used significantly less psychiatric hospital services over 2 years (-$6,906, p=. 0025), but more nursing home services (+$7,508, p=. 0074) and prescription drugs (+$962, p<. 0001). Nearly 28% of patients treated within two years delayed the onset of drug therapy more than 30 days. Having started a delayed course of antipsychotic therapy during the first year was associated with significantly higher first year total costs (+$5,223, p=. 0270). However, this impact of delayed therapy measured over two years decreased to +$2,678 (p=.5158). For patients with no delay in the start of drug therapy, 48% change therapy in the first year, which increases to nearly 55% after two years. Patients who change drug therapy exhibit significantly higher costs: +$10,517 after 1 year and +$15,206 over two years. CONCLUSIONS: As in the earlier analysis, antipsychotic drug use patterns in Medi-Cal suggest that standard medications do not meet the therapeutic needs of patients with schizophrenia which results in higher total health care costs.