Many states, looking to rein in the cost of expensive antipsychotic drugs like Zyprexa, have turned to an unusual ally for help — the very company that sells the drug.
At more than $300 for a monthly prescription, Zyprexa, which is used to treat schizophrenia and bipolar disorder, is the single biggest drug cost for state Medicaid budgets.
So Eli Lilly, the maker of Zyprexa, offers to help states monitor doctors who treat Medicaid patients to make sure they are not wasting money on mental illness drugs because of what psychiatrists call “sloppy prescribing” — giving patients too many similar medications or doses that are too high. Twenty states use Lilly’s free service.
But some experts question why these states let Lilly help oversee spending on its own medication.
“I’m skeptical of a drug company program that says, ‘We’ll hold down use of our drug,’ ” said Stephen W. Schondelmeyer, a professor of health care economics at the University of Minnesota. He described such programs as thinly disguised marketing.
Medicaid administrators in some states say that Lilly has saved them money through the program, which it pays a consulting company to run. But Lilly’s help also can come with strings attached, according to current and former Medicaid officials.
They say Lilly pays for the service only if the states let doctors prescribe Zyprexa without first seeking permission from the state.
Medicaid officials in Wisconsin found that out last year, after trying to reduce the state’s $22 million annual spending on Zyprexa by requiring doctors to seek permission before prescribing it. Lilly responded by ending the program.
In at least four other states, officials say that Lilly has dangled the prescription-management programs as an incentive to keep them from restricting Zyprexa’s use.
Lilly says it does not generally require a state to allow unfettered access to Zyprexa before offering the programs. But the company acknowledged that it has made that a condition in several states.
And a Lilly spokeswoman, Janice M. Chavers, acknowledged that the company was not currently operating the program in states that required doctors to seek permission to prescribe Zyprexa for Medicaid patients. Wisconsin, Tennessee, Pennsylvania and nine other states have placed Medicaid restrictions on the drug.
The company declines to say how much it has spent on the monitoring programs, which are operated by a pharmaceutical research and consulting company, Comprehensive NeuroScience of White Plains, N.Y.
Similar industry-sponsored monitoring programs have been established to manage diseases like diabetes, asthma and chronic heart failure. But in mental health drugs, Lilly’s effort is the biggest.
The Lilly program has operated in two dozen states since it began in 2003. Doctors who veer from guidelines on dosage strengths and combinations of medications for Medicaid patients are sent “Dear Doctor” letters pointing out that their prescribing patterns fall outside the norm. Compliance is voluntary.
The program also tracks whether patients are renewing prescriptions. Doctors are notified if patients are not, to prevent setbacks in their condition.
Because many of the nation’s mentally ill are poor, Medicaid programs are among the largest purchasers of antipsychotic drugs like Zyprexa. Medicaid agencies spent more than $1.3 billion on the drug in 2005.
But Zyprexa’s cost is only one reason for the caution. Another concern for states is the drug’s link to weight gain and increased blood sugar, precursors to diabetes. In 2004, the American Diabetes Association found that Zyprexa was more likely to cause diabetes than many other antipsychotic drugs.
Zyprexa can be highly effective. And Lilly says that a clear connection between the drug and diabetes has never been established.
Separate from the Medicaid monitoring programs, Lilly’s marketing of Zyprexa is the subject of lawsuits by seven states that claim the company hid side effects of the drug and promoted it for unapproved uses.
Lilly, also under state and federal investigation for its marketing of Zyprexa, denies the accusations and says it has behaved legally and appropriately.
Lilly acknowledges that it decided to finance the programs in response to state efforts to cut costs. In some cases, the states were drawing up lists of drugs that were preferred and others that require prior approval.
Lilly says it objects to such lists because it believes in open access for all mental health drugs. For people with serious mental illness, the company says, doctors need the freedom to use what works best.
“For this population, it’s been shown time and time again that drugs are not interchangeable,” Jack E. Bailey, a Lilly vice president, said.
On that score, the company has support from many mental health advocates who argue that open access to medications saves money by reducing hospital admissions and keeping patients productive. But current or former officials in Georgia, Kentucky and Tennessee are among those who say Lilly tied the program to unrestricted access to Zyprexa and the company’s other mental health drugs.
Lilly’s pitch in 2005 was, “ ‘we’ll fund this program if you put our product on the preferred-drug list,’ ” said David Beshara, chief pharmacy officer for Tennessee Medicaid.
Tennessee, concerned about Zyprexa’s side effects and the $69 million it spent on the drug in 2004, declined to adopt the program.
Mr. Beshara said the potential savings from the program were unclear. And he cited another concern: the program has been offered in lieu of rebates that companies often pay to states that place their drugs on preferred lists.
In Pennsylvania, the former state deputy secretary for medical assistance, James L. Hardy, said Lilly had offered to pay for a prescription-monitoring program instead of rebates before the state developed its preferred-drug list in 2005. He declined to go along.
“I didn’t like that commingling of service and rebates,” Mr. Hardy said. “I want to manage the benefit, and I want to get the best rebate deal I can. I don’t want to settle for half a loaf.”
Mr. Hardy said Pennsylvania eventually placed Zyprexa on a list of restricted drugs.
Some states, notably Michigan and Missouri, have publicized results showing that the Lilly program helped save money. And they generally praise the program.
“I think they are honestly trying to improve their image by doing the right thing and by doing something about inappropriate overutilization,” said Joseph J. Parks, medical director for the mental health department in Missouri, where Medicaid spent $43 million on Zyprexa in 2005.
Dr. Parks has served as a paid consultant to Comprehensive NeuroScience.
Officials in Michigan said that they, too, had saved money with the program. But Ben Hansen, a mental health advocate in that state, has challenged Lilly’s assurances that the program is run independently of the company.
Mr. Hansen, who describes the program as “incestuous,” obtained documents through a Freedom of Information request that showed a Lilly account executive had asked to take part in planning sessions and offered to have Lilly representatives brief doctors.
Michigan officials said that the Lilly account executive had not been involved in policy decisions.
In Oregon, where Lilly set up a program in 2004, the state’s former mental health director, David A. Pollack, recalls that he came to suspect a hidden agenda. He said that Comprehensive NeuroScience resisted two cost-saving techniques.
One was pill-splitting. Because drugs frequently cost about the same at various strengths, some experts recommend buying higher doses and splitting the pills. Another proposed technique was to have patients who had been prescribed two pills a day take only a single higher-dose pill.
“The economics are straightforward,” said Dr. Pollack, a psychiatrist. But he said that Comprehensive NeuroScience resisted his effort to incorporate the idea in their letters to doctors. The state paid for its own letters to doctors recommending the techniques.
Comprehensive NeuroScience contends that it did not oppose Oregon’s use of the techniques, but says that there is little data on their effectiveness with mental illness patients.
In Kentucky, where Lilly acknowledges having linked support of the program to preferred status for Zyprexa, the company’s persistence may pay off.
In 2003, after Kentucky Medicaid officials restricted Zyprexa’s use, the company offered about $5 million worth of such management programs in the state, said Robert Hughes, former chairman of a committee in charge of reviewing drugs.
“I strongly suspect that it was a way to keep their drug from being prior-authorized,” recalled Dr. Hughes, a doctor in Murray, Ky.
At the time, Kentucky spurned Lilly’s offer, Dr. Hughes said.
But late last year, the state agreed to accept the program financed by Lilly. In exchange, Zyprexa would be placed on the preferred list of medications. The arrangement is awaiting approval by the federal Centers for Medicare and Medicaid Services.
Thomas Badgett, the current Medicaid medical director in Kentucky, predicts that the Lilly program will help curtail spending.
But Wisconsin has found that it can save more money without Lilly’s help. Since Wisconsin placed restrictions on Zyprexa and three other antipsychotic drugs last year, and Lilly ended its program, the state says its spending on those drugs has declined by $4 million.
