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OBJECTIVE: To evaluate the association between drug therapy patterns achieved with conventional antipsychotics and direct healthcare costs over 2 years. METHODS: Paid claims data from the California Medicaid (Medi-Cal) program were used to identify 2476 patients with schizophrenia for whom 2 years of data were available. Ordinary least squares (OLS) regression models were used to estimate the association between lack of antipsychotic drug therapy, delayed therapy, changes in medications, and continuous therapy on healthcare costs over a 2-year period. RESULTS: Nearly 99% of Medi-Cal patients with schizophrenia were treated with conventional antipsychotics. Patients with schizophrenia consumed nearly $48,000 in direct costs over 2 years. Over 16% of patients did not use any antipsychotic medication for 2 years. Untreated patients used more healthcare resources than treated patients did ($10,833, P = .0422), especially psychiatric hospital care ($8,027, P = .0004). However, treated patients frequently experienced suboptimal drug use patterns. Nearly 33% of treated patients delayed antipsychotic therapy for up to 2 years. Delayed therapy was associated with increased costs of $12,285 (P = .070). Over 56% of patients experienced changes in therapy that were associated with higher total direct costs ($17,644, P < .0001). Finally, only 3.2% of treated patients used an antipsychotic medication consistently for 2 years. However, continuous drug therapy was not associated with lower costs. CONCLUSION: Suboptimal drug use patterns are common and costly in Medi-Cal patients with schizophrenia who initiated therapy with conventional antipsychotics.