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Objective: Medicare Part D provides formulary protections for antipsychotics but does not exempt these drugs from cost-sharing. We investigated the impact of Part D coverage on antipsychotic drug spending, adherence, and clinical outcomes among beneficiaries with varying indications for use. Methods: We conducted a historical cohort study of Medicare Advantage beneficiaries who received antipsychotic drugs, with diagnoses of schizophrenia or bipolar disorder or with no mental health diagnoses (N=10,190). Half had a coverage gap; half had no gap because of low-income subsidies. Using fixed effects regression models, we examined changes in spending and adherence as beneficiaries experienced cost-sharing increases after reaching the gap. We examined changes in hospitalizations and emergency department visits using proportional hazard models. Results: Across all diagnostic groups, total monthly expenditure on antipsychotic drugs decreased with cost-sharing increases in the gap compared with those with no gap (eg, schizophrenia: -$123 95% confidence interval [-$138, -$108]), and out-of-pocket spending increased (eg, schizophrenia: $104 [$98, $110]). Adherence similarly decreased, with the largest declines among those with schizophrenia (-20.6 percentage points [-22.3, -18.9] in proportion of days covered). Among beneficiaries with schizophrenia and bipolar disorder, hospitalizations and emergency department visit rates increased with cost-sharing increases (eg, schizophrenia: hazard ratio=1.32 [1.06, 1.65] for all hospitalizations), but did not among subjects without mental health diagnoses. Clinical event rates did not change among beneficiaries with low-income subsidies without gaps. Conclusions: There is evidence of interruptions in antipsychotic use attributable to Part D cost-sharing. Adverse events increased among beneficiaries with approved indications for use, but not among beneficiaries without such indications.