Wednesday, November 30, 2005

Big Pharma and Medicaid

Because of the burgeoning of health care costs in Medicaid, governors have been screaming at Congress for help. The House of Representatives has responded with a new cost-cutting plan that puts the onus on the poor to come up with more money in the form of copay for each bit of healthcare, thereby completely overlooking the fact that the poor are on Medicaid because they don't have the money to pay for a private insurance policy. Included in the plan was an additional provision that allowed states to steer Medicaid recipients to less expensive medications or face paying for the prescription themselves.

But, wait: there's more. Shortly before the Thanksgiving recess, a new provision was passed that excluded mental health medications from the 'preferred' medications lists in states. As today's Washington Post points out, this provision is a good example of both the power of pharmaceutical companies and the problems in addressing mental health issues in this country.

As part of a House budget bill that reduces spending on Medicaid prescription drugs, pharmaceutical giant Eli Lilly and Co. and other businesses secured a provision ensuring that their mental health drugs continue to fetch top price at a cost of hundreds of millions of dollars to the states.

The provision -- inserted by Rep. Steve Buyer (R-Ind.), whose district flanks Lilly's Indianapolis headquarters -- would largely exempt antipsychotic and antidepressant medications from a larger measure designed to steer Medicaid patients to the least expensive treatment options. The House Energy and Commerce Committee approved Buyer's amendment this month over the strenuous objections of Chairman Joe Barton (R-Tex.) and the National Governors Association. It survived unchallenged in the $50 billion budget-cutting bill that narrowly passed the House just before Congress left for Thanksgiving recess.

As part of a House budget bill that reduces spending on Medicaid prescription drugs, pharmaceutical giant Eli Lilly and Co. and other businesses secured a provision ensuring that their mental health drugs continue to fetch top price at a cost of hundreds of millions of dollars to the states.

The provision -- inserted by Rep. Steve Buyer (R-Ind.), whose district flanks Lilly's Indianapolis headquarters -- would largely exempt antipsychotic and antidepressant medications from a larger measure designed to steer Medicaid patients to the least expensive treatment options. The House Energy and Commerce Committee approved Buyer's amendment this month over the strenuous objections of Chairman Joe Barton (R-Tex.) and the National Governors Association. It survived unchallenged in the $50 billion budget-cutting bill that narrowly passed the House just before Congress left for Thanksgiving recess.

...To opponents, however, Buyer's measure underscores the excessive power that corporate interests wield on Capitol Hill. Critics say the measure also violates the purpose of the budget-cutting bill, which was drafted to give state governments the flexibility to cut program costs in ways that minimize the harm done to beneficiaries.

"This is obviously an attempt to prevent state Medicaid offices from getting cheaper, just-as-beneficial drugs to patients, and it's really going to stick it to the taxpayers," said Steve Ellis, a vice president and Medicaid analyst at Taxpayers for Common Sense.

Under the budget-cutting bill's Medicaid provisions, states would be allowed to create lists of preferred medications. Then, for the first time, they could charge higher co-payments -- even to poor children and pregnant women -- for medicines not on those lists. The bipartisan National Governors Association, which promoted the changes, maintains that states will save billions of dollars by guiding patients away from newer drugs that may be far more expensive -- but no more effective -- than older alternatives.

Mental health medicines need special attention because the complex human brain responds very differently to different drugs and different dosages, advocates of the amendment say.

The governors group warned that the cost differential between an older, established drug such as Prozac and a new entrant can be staggering, while the difference in utility is often marginal.

Moreover, no state could meet the requirement of proving that one drug is equivalent to another, because drugmakers' clinical trials compare their products with placebos, and scant evidence is available comparing one drug with another, said Stan Rosenstein, deputy director of California's Department of Health Services
[Emphasis added]

This is one of those situations where there appears to be a conflict between two equally justified interests. Advocates for those with mental illnesses want them to receive the most effective treatment available, whether they are poor or wealthy. Newly developed medications are frequently more effective because of research discoveries. Why should those discoveries benefit only those wealthy enough to pay for them? That's one side of the argument.

The other side is that the improvement in the efficacy of the drug is often so slight that it hardly outweighs the increased cost to the entity responsible for paying for the drug. The governors want to be in the position of forcing pharmaceutical companies to lower the prices in order to get on the preferred list, with the promise that volume in sales will offset the initial cost.

The underlying concern of Big Pharma, of course, is that the governors' approach will result in a back-door approach to shortening the life of the exclusive patent on news medications. Big Pharma doesn't want any cap on their pricing and their profits, and these companies have never been shy about investing in politicians who will help them out in this respect.

...Lilly has been the biggest corporate contributor to Buyer's campaigns. Since 1989, the drug company has donated $46,500 to Buyer's congressional campaigns, according to the Center for Responsive Politics.

Buyer? Perhaps a better name for the Gentleman from Indiana is Seller.

5 Comments:

Blogger josh williams said...

Lilly has spent how much on lawyers to defend itself in class action lawsuits against its mental health drugs. A person diagnosed with depression takes pozac and then kills themselves, Lilly is liable. If they are not treated is Lilly Liable?
Health care costs skyrockting prices can be partly attributed to law suits.
If Lilly would leave the town of Indianapolis, the town would be devastated. Lilly provides high paying jobs with great benefits to 1,000's of Indiana residents. Lilly has one of the largest charitable grant programs in the US. Far more money than 100's of millions. Perhaps the Federal government should take over research and developement of all drugs, and keep Lilly and other companys greedy little mits off the reseach dividends.

10:09 AM  
Blogger scout prime said...

But they'll have a fit when someone off their meds does something.

12:18 PM  
Blogger cabearie said...

Josh,

My point is that Lilly and its colleagues spends millions lobbying Congress on extending patents so that cheaper generic drugs are kept off the market and lobbying Congress to pass such bills as the Medicare Prescription bill which does not allow the Federal Government to negotiate volume pricing.

It also spends millions on advertising on television and on courting doctors to prescribe their medication.

Why not be reasonable corporate citizens and cooperate in the Medicaid plan and let the free market they espouse provide profits?

Because with people like Rep. Buyer on board, they don't have to.

6:20 PM  
Blogger josh williams said...

For a company like Lilly an average of $2900. a year to buyers campaign is not that big of a sum. Of courss they want to extend their patents thats their money. Without this incentive we would not have these drugs, the companys spend millions/billions on research and they need to make a profit, sometimes they are presented as devils, sometimes by political partys. The fact is they would agree to a rational plan but politicians and lawyers become involved and then the vile reality is poured upon the poor. It is not just Lilly and the other companys that should be accountable, lets consider their risk to law suits and bad press, not cut and dried, not always their greed.
No offense intended just my opinion, we agree that all people should be treated equal we just have trouble agreeing on how in the real world, (created by all politcal partys)should address the challanges. One more thing I wish you would change your format for posting so I could use spell check, my
werds sumtimes, well you get the picture.

8:53 PM  
Anonymous Blue Cross of California said...

I hope they improve the health care system and help the many in need with medicaid rather than let more lack health insurance coverage.

10:33 AM  

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