The Kansas Medicaid program is expected to spend $150 million on prescription drugs this year.
“It’s hard to tell at this point,” said Peter Hancock, a spokesman for the Kansas Health Policy Authority, which oversees the program. “We’ve been fortunate that some of the more expensive, high-use drugs went generic last year, which helped bring some of the cost down. But at the same time, usage is up. More prescriptions are being written.”
Medicaid is one of the biggest and fastest growing programs in Kansas government. Over the past decade, annual spending on it has nearly doubled to $2.5 billion.
More than 40 percent of the Medicaid drug costs are for mental health prescriptions, surpassing the combined costs for antibiotics, pain medicine, and those for treating gastric disorders and asthma.
In the fiscal year that ended June 30, 2010, Kansas Medicaid spent $166.4 million on prescriptions and $68.9 million of that -more than 40 percent - was for mental health drugs for adults and children.
The program paid for almost 924,000 mental health prescriptions for 94,700 beneficiaries. That was 57,000 more prescriptions for 5,000 fewer people than the year before.
Since fiscal 2007, according to agency records, total spending on mental health drugs has been about $300 million. About $42.5 million of that went for a single, name-brand drug, Abilify, which is made by Bristol-Myers Squibb. Abilify is used to treat schizophrenia, bipolar disorder, and depression. It also is used to control irritability in autistic children.
“We have cost-control mechanisms in place for every drug class except for mental health drugs,” Hancock said. “It’s been talked about, certainly. It’s been proposed a couple times, but it’s not something the Legislature has wanted to pursue and, frankly, I doubt we’ll propose it for next year. The interest just isn’t there.”
In 2002, mental health advocates were successful in getting legislators to pass a state law that prohibits Medicaid officials from putting mental health drug prescriptions through the same screening procedures commonly used by commercial insurance companies.
“It’s a debate that’s been going on for a long time,” said Brian Caswell, a past president of the Kansas Pharmacists Association. “On one hand you have the insurance community – in this case, Medicaid – saying if two drugs have the same effect, you ought to go with whichever costs less. And then you have the medical community saying that’s essentially denying the mentally ill access to the newer drugs, which may have to take three or four months to show that they really are better.
“It all comes down to trying to strike a balance between cost and benefit,” he said. “The problem is how do you define cost and how do you define benefit?”
“I don’t think either side knows,” said Don Marquis, a University of Kansas philosophy professor who teaches medical ethics.
“I don’t think the research is there because it’s time-consuming and incredibly expensive,” he said. “So you’re left with drug company studies that show how good a drug works and insurers pointing to studies saying there’s not much evidence that the new drug is better than the old drug.The prior authorization process typically works like this: -The doctor sends the prescription to the pharmacist. -The pharmacist consults the “preferred drug list” of the patient’s insurer, which is either a commercial company or a government program such as Medicaid. -The list shows the drugs for which the insurer is willing to reimburse – usually the cheapest, generic alternatives - and how much. Sometimes, the lower cost of the preferred drugs result from manufacturer discounts or rebates. -The process is computerized. Within seconds, a pharmacist know whether a prescription in on an insurer’s list. -Physicians wanting to press for higher-cost drugs are expected to submit their concerns in writing. Those appeals may take several days.
The prior authorization process typically works like this:
-The doctor sends the prescription to the pharmacist.
-The pharmacist consults the “preferred drug list” of the patient’s insurer, which is either a commercial company or a government program such as Medicaid.
-The list shows the drugs for which the insurer is willing to reimburse – usually the cheapest, generic alternatives - and how much. Sometimes, the lower cost of the preferred drugs result from manufacturer discounts or rebates.
-The process is computerized. Within seconds, a pharmacist know whether a prescription in on an insurer’s list.
-Physicians wanting to press for higher-cost drugs are expected to submit their concerns in writing. Those appeals may take several days.
“I don’t know the answer,” Marquis said, “but I think it’s pretty clear that whenever you have a situation where physicians and psychiatrists can prescribe whatever they think is best, costs are going to escalate.”
To help assure the right drugs are prescribed and help control Medicaid costs, state health officials have proposed prescription screening similar to that used successfully by commercial insurers such as Blue Cross Blue Shield of Kansas.
Andy Allison, executive director of the health policy authority, testified to legislators earlier this year that a so-called, “prior authorization,” system for mental health drug prescriptions could save taxpayers $2 million a year.
But advocates for the mentally ill have fought prior authorization, arguing it would limit access to the latest and most effective medications.
“It doesn’t make sense to put somebody on a cheaper drug because you think it’s going to save money and then have that person end up in a hospital because the drug didn’t work,” said Mike Hammond, executive director of the Association of Community Mental Health Centers of Kansas. “That hospital stay is going to cost you a lot more than if you’d have just gone ahead and given that individual the prescribed drug in the first place.”
An important exemption
In 2002, Hammond led the lobbying effort to put on the books Kansas Statute 39-7, 121b, which bars state officials from prior review or any other restrictions on mental health drugs for adults and children on Medicaid or HealthWave.
Pharmaceutical companies also backed the law, a short one that in part reads:
"Medications that will be available under the state medicaid plan without restriction for persons with mental illnesses shall include atypical antipsychotic medications, conventional antipsychotic medications and other medications used for the treatment of mental illnesses."
Subsequent proposals from the health policy authority to repeal or modify the law have been opposed by the mental health and drug lobby and rejected by the Legislature.
Medicaid programs in all 50 states, including Kansas, use preferred drug lists and prior authorization to control costs for other medicines.
But at least 30 states, including Kansas, have laws or policies exempting mental health drugs from the reviews, according to a survey by the Bazelon Center for Mental Health Law.