Patients May Pay Price For Medicaid Drug Policy

A report from the Kaiser Commission on Medicaid and the Uninsured describes flaws in the design and implementation of Michigan’s preferred drug list program for Medicaid patients.

Michigan was the first state to establish a Medicaid Pharmaceutical Product List (MPPL) that does not exempt psychotropic drugs (Psychiatric News, April 19, 2002; January 18, 2002).

The Michigan legislature authorized the Department of Community Health (DCH) to propose the MPPL with the expectation that the effort would produce $42.8 million in savings for Fiscal 2002.

Kaiser contracted with Health Strategies Consultancy to produce the report “Case Study: Michigan’s Medicaid Prescription Drug Benefit.”

The consulting firm interviewed 24 individuals, representing providers, beneficiaries, pharmacists, members of the legislature, and First Health, the pharmacy benefits management (PBM) firm that administers the program. State officials refused to be interviewed because of a lawsuit challenging the legality of the program.

These are among the allegations made in the report:

• Fearing opposition from the pharmaceutical industry, the state sought virtually no input from providers, pharmacists, beneficiaries, and drug manufacturers in developing the MPPL.

• DCH made only a few changes to the list of drugs that did not require prior authorization in response to beneficiary and provider concerns.

• Providers, beneficiaries, drug manufacturers, and pharmacists expressed concern that the most vulnerable Medicaid beneficiaries were subject to prior-authorization restrictions. The drug formulary is more restrictive than other state formularies and other health plans that provide pharmaceutical coverage in Michigan.

• Poor and inconsistent communication between the DCH and beneficiaries and providers about dates for implementation and a changing list of preferred products created significant confusion and resulted in restrictions in access to medication.

• Significant problems remain, such as failure to notify beneficiaries of their right to appeal and confusion about the grandfather clause for psychiatric medications.

According to the report, a pharmacy and therapeutic committee (P & T Committee) “relied upon clinical data, effectiveness studies, and peer-reviewed literature to select the drugs for the MPPL.”

To gain MPPL placement (no prior authorization required) for products not selected as best in class, manufacturers were asked to match the net price of the drug ranked first in the category. The state did not seek supplemental rebates for products selected best in class or for products whose net price was already below the level of the best-in-class drugs.

Prior authorization is required for Zoloft, Celexa, Effexor XR, Serzone, and Ambien. It is not required for Paxil, fluoxetine, Wellbutrin SR, Risperdal, and Zyprexa.

The Michigan Psychiatric Society (MPS) secured a victory when it persuaded state officials to grandfather in Zoloft, Celexa, Luvox, Effexor XR, Aricept, and Durgesic Patch for patients who were taking the drugs prior to March 1, 2002 (Psychiatric News, April 19, 2002).

What’s at Stake?

Opinions differ about the degree of hazard to patient care that the MPPL represents. In January APA joined the National Alliance for the Mentally Ill and the National Mental Health Association in a press release that urged policymakers to “work with the mental health community to find solutions that do not come at the expense of people with mental illness.”

In that statement, APA President Paul Appelbaum, M.D., said, “The attempt to control Medicaid costs by restricting patients’ access to the most effective drugs is not only bad medicine, it’s doomed to failure as a cost-saving measure. . . . Psychotropic medications are very different from other medications in the time it takes to be able to judge whether they’ve been effective and in the idiosyncratic reactions patients have to them. Only the patient’s physician should make the decision about which drug to prescribe.”

MPS member Oliver Cameron, M.D., Ph.D., told Psychiatric News, “We must ensure that patients who are stable on a particular medication can continue to receive it without a hiatus in which other medications are tried. Otherwise, the patient could get worse. If hospitalization results, it would take a long time to recover the costs saved by using a cheaper medication.”

However, Cameron said, the Michigan MPPL now is “manageable,” as the result of negotiations with Michigan state officials. If there are two or three drugs in each class that are available on the preferred drug list, he added, the great majority of patients will get the medication they need without prior authorization.

Cameron is a professor of psychiatry at the University of Michigan. (See box on Original article: page 4 for comments from another Michigan psychiatrist.)

Robert Rosenheck, M.D., director of the Northeast Program Evaluation Center and a professor of psychiatry and public health at Yale Medical School, told Psychiatric News, “In principle, the idea of creating a situation in which drug manufacturers compete with each other on price, when evidence suggests no difference in effectiveness, seems like a very American way of doing business. Giving a small advantage of convenience to companies with equally effective drugs, but different prices, might be in the public interest and certainly should be studied.

“Patients, however, ultimately must have the option of getting any medication they need. The exclusive use of strategies such as preferred drug lists to create barriers to psychotropic medication would be an unfair form of discrimination.”

Rosenheck is chair of APA’s Corresponding Committee on Health Services Research and has studied the cost-effectiveness of psychotropic medications.

Anthony D’Agostino, M.D., chair of the Subcommittee on Pharmacy Benefits Management of APA’s Managed Care Committee, told Psychiatric News that he agreed with Cameron’s assessment that the MPPL is “manageable.”

“I treat only patients who have been hospitalized,” he said, “so all my patients are on medication. Many of them are Medicaid patients.”

States Face Hard Choices

D’Agostino and the other interviewees commented on the difficult choices state legislatures and officials face in light of the escalating costs of Medicaid programs and declining tax revenues.

In January 2003 the Kaiser Commission on Medicaid and the Uninsured released the results of a survey, “State Fiscal Conditions and Health Coverage: How Are Budget Pressures Putting the Squeeze on Medicaid and SCHIP Programs?,” which reports that 49 states and the District of Columbia were planning or had implemented cuts in Medicaid for Fiscal 2003. Thirty-two states reported making cuts twice.

Among the cuts are provider payment reductions (37 states), prescription drug cost controls (45 states), benefits’ reductions (25 states), increased copayments (17 states), and reductions in support for long-term care (17 states).

State budget shortfalls are expected to increase from $37.2 billion in Fiscal 2002 to $60 billion in Fiscal 2004, according to data presented at the press conference.

Appelbaum told Psychiatric News that it was important to place the issue of Medicaid preferred drug lists in historical context. He said that beginning in the 1960s, many patients were discharged from state hospitals “to shift as much of the burden of caring for them as possible to the federal government.”

“They lived in the community on federal SSI/SSDI payments, and their medical care—including the psychotropic medications that kept them out of the hospital—were paid for by Medicaid, with the federal government picking up one-half or more of the cost.

“Now,” he continued, “the states, having put these people on the Medicaid roles in the first place, are objecting to paying for their share of these essential medications. The result is yet another abdication by the states of their responsibilities to care for the indigent mentally ill.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit in federal court to stop the Michigan program. According to PhRMA’s written complaint, Medicaid prescription drug sales nationwide total approximately $20 billion each year (Psychiatric News, September 20, 2002).

Four mental health advocacy organizations filed suit in state courts to stop implementation, but no suit has been decided (Psychiatric News, September 20, 2002).

“Case Study: Michigan’s Medicaid Prescription Drug Benefit” is posted on the Web at www.kff.org/content/2002/20020213/4083.pdf. ▪