entucky's Medicaid program was $230
million in the red last year, and drastic cuts were on the table. A
state panel proposed excluding Zyprexa, an antipsychotic medication
that is the state's single biggest drug expense, from the Medicaid
list of preferred medications.
That was when the National Alliance for the Mentally Ill and the
Kentucky Consumer Advocate Network swung into action.
The two groups, which are nonprofit, bused scores of protesters
to a hearing in Frankfort, the state capital; placed full-page ads
in Kentucky newspapers attacking the proposal; and sent angry faxes
to state officials. What the advocacy groups did not say at the time
was that the buses, ads and faxes were paid for by Eli
Lilly & Company, Zyprexa's manufacturer.
Zyprexa produced $3.69 billion in revenue last year, making it
Lilly's top seller and the sixth-largest-selling drug in the world.
In the United States, 70 percent of Zyprexa sales are to government
agencies, mostly to Medicaid. If just a handful of large states were
to limit Zyprexa sales, Lilly's profit and share price would be
likely to suffer significantly, analysts say.
So Lilly and other drug makers — whose influence in Washington
was most recently on display in the debate over a Medicare drug
benefit — are flexing their muscles in state capitals. In state
after state, the companies are fighting proposals to create or
toughen government programs that use preferred-drug lists to try to
Drug makers argue that the lists are unfair to the poor,
depriving them of medicine available to others. And the lists, the
companies say, tie the hands of doctors who should be making
decisions about appropriate care — especially when it comes to
finding the right medication for someone with mental illness. State
officials respond that limiting access to some high-price drugs is
one way, in tight times, to continue providing care to as many of
the poor as possible — particularly in cases where there is little
evidence that the costlier drugs are more effective.
Lilly lost the battle in Kentucky. The state decided to take
Zyprexa off its list of preferred drugs, which means that patients
must try and fail on a similar, cheaper drug before it will pay for
Zyprexa. But it was a rare defeat.
After intense lobbying by patient groups and drug makers, the New
York State Legislature in May overrode a veto by Gov. George E.
Pataki and enacted a law preventing state Medicaid officials from
establishing a preferred-drug list. New York's $4-billion-a-year
bill for Medicaid drugs is the biggest in the nation; in just the
first 10 months of this year, the state spent $205 million on
Zyprexa, more by far than for any other drug.
Oregon's Legislature dropped thousands of patients from its
Medicaid program in August rather than restrict choices for the
others by tightly policing the state's preferred-drug list. The drug
makers see little room to compromise. They are reluctant to
negotiate prices, for example, because under federal Medicaid law, a
discount to one state must be offered to all. And preferred-drug
lists for Medicaid can influence doctors' prescribing practices for
patients they see outside the Medicaid program, blunting the effect
of the drug companies' expensive marketing efforts.
Because of their close ties to the National Alliance for the
Mentally Ill and other advocacy groups, drug makers have been
particularly successful in arguing that states should exempt
antipsychotic medications like Zyprexa from preferred lists.
Twenty-eight states specifically exempt drugs for treating emotional
disorders from cost controls, a Lilly spokeswoman, Anne Griffin,
"Antipsychotics are the third rail of Medicaid politics," said
David Parella, director of Connecticut's Medicaid program. "If you
try to confront this issue, you get hit with these strange
bedfellows of the Trotskyite lawyers for patient advocacy groups
being allied with the plutocratic lawyers for drug companies."
Dr. Paul Jeffrey, director of the Massachusetts Medicaid program,
said that he had not proposed limits on antipsychotic medications
for fear that the fight could lead state legislators to support
wider limits on the preferred-drug list. "The battle would have been
too bloody," he said.