Medicaid Bill Exempts Some Psychiatric Drugs

WASHINGTON —  In part of a House budget bill that reduces spending on Medicaid prescription drugs, pharmaceutical giant Eli Lilly & Co. and other companies have 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. Stephen E. 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 panel Chairman Joe L. Barton (R-Texas) and the National Governors Assn. It survived unchallenged in the $50-billion budget-cutting bill that narrowly passed the House this month.

Mental health advocates defend Buyer’s provision, saying it is necessary to ensure that vulnerable mental health patients receive proper treatment.

Andrew Sperling, the director of legislative advocacy for the National Alliance on Mental Illness, said his organization had been fighting efforts to restrict access to mental health drugs for years and strongly backed Buyer’s amendment.

“We believe these [restrictive] policies are destructive and contrary to good clinical policies,” he said. “We don’t like them.”

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.

The Congressional Budget Office has estimated that the provision will raise federal drug spending by $125 million over five years and state officials say they are likely to face far higher costs.

In a letter to the California congressional delegation, Republican Gov. Arnold Schwarzenegger, estimated that the provision would raise the state’s prescription drug costs by $50 million a year.

Lilly spokesman Ed Sagebiel acknowledged that his company sought the provision, but he noted that other drug companies did so as well, as did mental health advocacy groups. “On behalf of the patients, I ask, why is that wrong?” he said.

The bipartisan governors association 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 one drug was equivalent to another, because drug makers’ trials compare products with placebos, and scant evidence is available comparing one drug with another, said Stan Rosenstein, a deputy director at California’s Department of Health Services.