Drugmakers Win Exemption in House Budget-Cutting Bill

By Jonathan Weisman
Washington Post Staff Writer
Wednesday, November 30, 2005

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.

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 has 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, while state officials say they are likely to face far higher costs.

In a letter to the California congressional delegation, Gov. Arnold Schwarzenegger (R) estimated the provision would raise the state's prescription drug costs by $50 million a year.

"This would definitely limit states' flexibility," Barton protested earlier this month, before nine committee Republicans joined 22 Democrats to override the chairman's wishes. "And again the underlying basis of the bill is to give states more flexibility, not less flexibility."

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.

But the Buyer amendment carves out an exception for mental health drugs. Under the provision, states could not limit access to such medications unless they could prove to a drug review board that such restrictions would do no harm to patients. If a state won approval from a review board, patients seeking to go outside the preferred list of mental health drugs would have the right to appeal. If that appeal was not resolved in 24 hours, the state would have to grant a 30-day supply of the medication.

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.

"This provision will help protect a vulnerable patient population and help ensure they receive appropriate medical care," said Ed Sagebiel, a Lilly spokesman. He 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 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.

With more than 15 companies making mental health drugs, Lilly hardly has the market cornered, according to Sagebiel. Lilly does have six such medicines, including Prozac, which now has a generic alternative; Cymbalta, a newer antidepressant; Strattera, for attention-deficit (hyperactivity) disorder; Symbyax for bipolar depression; and Zyprexa for schizophrenia.

Lilly has been adept at using Washington for its own purposes, Ellis said. The company fought for years to extend the patents on Prozac and stave off a generic version. In 2002, it was at the center of a political firestorm over a provision, slipped into the giant law that created the Department of Homeland Security, that shielded vaccine makers from lawsuits by families of autistic children.

And it was Lilly's home-state congressman, Buyer, who got the amendment on mental health drugs through the House.

Lilly's headquarters are located in downtown Indianapolis, which falls within the congressional district of Rep. Julia Carson (D). But many of Lilly's employees live in Buyer's suburban Indianapolis district, and -- unlike Carson -- Buyer is a member of the committee with jurisdiction over Medicaid.

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.

Mike Copher, Buyer's chief of staff, said Buyer's interest in the matter stemmed not from his district's proximity to Lilly but from his work as chairman of the Veterans' Affairs Committee and his former position on the House Armed Services subcommittee on military personnel.

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