Mental Health Parity Laudable, But House Legislation Would Put Medicaid Patients at Risk, Lilly Says

Provisions of HR 1424 could reduce access to necessary medications for

thousands of Americans

Mar 05, 2008, 00:00 ET from Eli Lilly and Company

    INDIANAPOLIS, March 5 /PRNewswire-FirstCall/ -- Today Eli Lilly and
 Company (NYSE:   LLY) reiterated its strong support for mental health parity
 -- the principle that insurers should treat mental and physical illnesses
 equally. But the company also expressed strong concerns over the way the
 parity legislation in the U.S. House (HR 1424) seeks to pay for the bill:
 by increasing the so-called Medicaid rebate from 15.1 percent to 20.1
 percent. Such an increase would limit Medicaid beneficiaries' access to
 medicines, including mental health medications, said Lilly. The company
 said its position is supported by a leading mental health advocacy group
 and Congressional Budget Office data.
     "HR 1424 would offer more generous mental health benefits to Americans,
 but it risks doing so on the backs of the sickest and poorest Americans,
 including vulnerable Medicaid patients," said Sonya D. Sotak, director,
 federal affairs, for Lilly. "At first blush, increasing the Medicaid rebate
 appears an alluring target for the federal government to pay for parity,
 but the harsh irony is that such an action could lead to even greater
 disparities in Medicaid patients' future access to medications."
     In a letter last week to House leaders, a leading mental health
 advocacy group, the National Council for Community Behavioral Healthcare,
 echoed these concerns. "I fear that increasing the pharmaceutical rebate in
 Medicaid could have the unintended consequence of reducing access to
 necessary medications for thousands of Americans. I urge you to find
 another way to pay for the provisions of HR 1424," wrote NCCBH President
 and CEO Linda Rosenberg, MSW.
     The Medicaid rebate, created in 1990, is the federal program that
 requires pharmaceutical companies to discount -- or "rebate" -- a portion
 of their revenues from sales to Medicaid patients. A CBO report on the
 program has said, "Although the Medicaid rebate appears on the surface to
 be attractive, it may have had unintended consequences for private
 purchasers." That is, whatever money Medicaid saves likely leads to cost
 increases for all other consumers -- a total that is believed to top $2.5
 billion dollars a year.
     Lilly also said the Medicaid rebate comes at a great cost to U.S. based
 pharmaceutical companies -- as many of these companies, like Lilly, have
 developed medications that predominately serve the Medicaid population,
 including people with serious mental illness.
     "The Medicaid rebate is a price control, which time and again has been
 shown to harm innovation, the U.S. economy, and ultimately public health,"
 Sotak said. "We urge the Congress to listen to the mental health advocacy
 community, review the data, and reject any further increases in the
 Medicaid rebate."
     Under the basic rebate formula, makers of brand-name pharmaceuticals
 rebate to the states at least 15.1 percent of the average manufacturer
 price that Medicaid beneficiaries purchase as outpatients -- a percentage
 that does not reflect the other discounts Medicaid gets, such as the fact
 that Medicaid already demands that it gets the "best price" when compared
 to all other purchasers in the United States.
     About Lilly
     Lilly, a leading innovation-driven corporation, is developing a growing
 portfolio of first-in-class and best-in-class pharmaceutical products by
 applying the latest research from its own worldwide laboratories and from
 collaborations with eminent scientific organizations. Headquartered in
 Indianapolis, Ind., Lilly provides answers -- through medicines and
 information -- for some of the world's most urgent medical needs.
 Additional information about Lilly is available at
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SOURCE Eli Lilly and Company