Objectives: The objective of this study was to develop a method to allocate treatment effects when patients switch medication frequently in longitudinal observational studies and apply the approach to assess the cost-effectiveness of treatments in the Schizophrenia Outpatient Health Outcomes (SOHO) study.

Methods: Data were collected on patients at entry to the SOHO study at 3, 6, and 12 months. The 12-month follow-up period was considered as three epochs: 0–3 months, 3–6 months, and 6–12 months. Patients who switched treatment at 3 months had their new treatment considered as a new baseline observation, as these two 3-month observations provide two sets of information on the cost-effectiveness of a drug in the first 3 months after initiation. Multivariate regression analysis was used to adjust for baseline covariates. The model allowed for flexible functional forms, and the cost data were modeled using an exponential mean function. Bootstrapping assessed the uncertainty of the estimated parameters and incremental cost-effectiveness analysis decision rule.

Results and Conclusions: We show the feasibility of the epoch analysis approach using data from the SOHO study comparing two antipsychotics. Estimates for the incremental cost and effectiveness per epoch over the full 12-month period are presented. Using the estimates of 200 bootstrap samples, we demonstrate how one drug is cost-effective compared with another.