Wall Street Journal Examines Prescription Drug Cost ‘Battle’ at Veterans Affairs Department
The Wall Street Journal today examines how the Department of Veterans Affairs has become "a unique testing ground of government and industry interplay" in the "battle" over rising prescription drug prices. Specifically, the Journal looks at VA guidelines for prescribing olanzapine, an atypical antipsychotic drug effective in treating schizophrenia and sold by Eli Lilly & Co. under the name Zyprexa. Recently, the VA issued guidelines that "encourag[ed]" doctors to prescribe two less-expensive atypical antipsychotic drugs -- risperidon, sold under the name Risperdal by Johnson & Johnson's Janssen Pharmaceutica, and quetiapine, sold under the name Seroquel by AstraZeneca PLC. In response to the guidelines, Lilly agreed to reduce the price of Zyprexa by "at least an added 10%" -- it was already discounted 24% -- if the VA agreed to "assur[e] equal access" to the drug. Instead, the VA recommended that doctors prescribe Zyprexa only after patients took Risperdal or Seroquel for 10 weeks. That proposal prompted mental health and veterans advocates to accuse the VA of taking a "fail first" approach to treating people with schizophrenia. The Journal reports that tension over the issue mounted as internal memos revealed that VA doctors "felt pressured" to not prescribe Zyprexa.
Lilly then hired a lobbying firm and enlisted the support of the National Alliance for the Mentally Ill, which receives 40% of its funding from 15 managed care and drug companies, including Lilly. During VA budget talks in the House in July 2001, NAMI asked lawmakers to include language in the appropriations bill that would "bloc[k]" the VA guidelines until a clinical study by the National Institute of Mental Health confirmed the relative effectiveness of the antipsychotics. "Frustrat[ed] with both warring parties," Congress and the VA reached a "compromise" directing the VA to give doctors discretion in prescribing antipsychotics but also stating that "price, market share and corporate interest [shouldn't] figure into choosing the best drug to treat mental illness." Deborah Steelman, a Lilly vice president, said, "What we had here was a payer aligned against a vendor and aligned against patient interests." But Andrew Muniz, deputy chief consultant for the VA pharmacy program, said the VA "can't leave the utilization of [antipsychotics] up to the marketing of industry." Robert Lynch, the VA's regional director for the central South, added, "This is a multibillion (dollar) issue for a company trying to protect market share. What we are is a multibillion (dollar) health care institution trying to stretch tax dollars. This is the inevitable conflict."
The antipsychotic debate illustrates how the VA "must struggle to find some balance between these rising [drug] costs and maintaining care for ... low-income and disabled vets," the Journal reports. The Journal adds that the prescription drug problem is "forcing [the VA] to pick winners and losers, among both veterans and drug companies." By 2003, the VA projects it will spend more than $3 billion, of a total $23.5 billion proposed budget, for outpatient prescription drugs. VA Secretary Anthony Principi said, "I have no doubt that pharmaceuticals are driving down costs by keeping patients out of the hospital. But there is an awful lot of pressure applied locally (by drug-company marketing) to prescribe certain drugs" (Rogers, Wall Street Journal, 2/13).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.