The new atypical antipsychotics, although more expensive than traditional agents, may reduce the financial burden posed by schizophrenic illness. OBJECTIVE: The objective of this study was to compare risperidone versus olanzapine on their impact on the mental health care costs of schizophrenia in a "real-world" setting. METHODS: This was a retrospective, comparative study based on claims data obtained from 2 large health care plans during 1996 and 1997. The primary variable analyzed was net patient mental health care cost per member per month (PMPM), defined as total mental health care cost excluding antipsychotic drug cost during treatment episodes with risperidone or olanzapine. The individual components of net mental health care costs were also analyzed. Between-group comparisons (for patients who received one or the other of the antipsychotics) were performed, controlling for differences in patient characteristics. Data was obtained from medical and prescription drug claims of individuals with schizophrenic disorders. Regression models combining risperidone and olanzapine treatment episodes were estimated to determine their effects on mental health resource use. RESULTS: A total of 129 risperidone (128 individuals) and 273 olanzapine (271 individuals) treatment episodes for schizophrenic disorders fell within the study period. Most components of mental health care costs were lower with risperidone than with olanzapine. Depending on the method of estimation, between-group regression models showed that risperidone reduced net mental health care cost PMPM by 36% p<0.01) or 53% (p<0.01) and total mental health care cost PMPM (inclusive of antipsychotic drug cost) by 32% (p<0.01) or 44% (p<0.01) compared with olanzapine. The major difference between risperidone and olanzapine users was in inpatient costs, which were 58% or 68% ($168 or $266) lower PMPM with risperidone, depending on the method of estimation. CONCLUSION: Relative to olanzapine, risperidone is associated with reduced mental health costs for schizophrenia patients in managed care populations.