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The present study provides a single snapshot of a landscape that is rapidly changing. Numerous factors are affecting the structure of the health care payment system in the United States and the combination of these will likely result in a vastly different state of access to and utilization of pharmaceuticals in general and psychotherapeutics specifically. We believe that the principal factors include:
The entry of new chemical entities into the psychotherapeutic market in the coming years will profoundly alter the dynamics shaping access to and utilization of these products in much the same way the launch of the current generation of products changed the market within the last decade. It can be expected that these products will be launched with at least modest price premiums to current agents.
Since the end of the primary research phase of this product, Pharmacia & Upjohn has launched reboxetine (Vestra®) as a new therapy for depression. This drug is the first in what is likely to be a new class of antidepressants that work almost exclusively on the norepinephrine system. Pfizer is expected to re-submit a New Drug Application for a new atypical antipsychotic, ziprasidone (Zeldox®) in 2000, even though this product was received a non-approvable letter from FDA in 1999.
In addition, our research shows over 10 new products for depression in Phase III, with launch dates expected as early at 2002. An additional 17 products are in Phase II, with expected launch dates as early as 2003. For schizophrenia or other psychotic disorders, we are aware of more than seven products in Phase III or already launched in other countries. It may be expected that several of these will attempt launch in the US.
However, even as these new agents are launched, the current group of antidepressants and antipsychotics will be nearing the end of their patent life. Fluoxetine will lose its patent exclusivity in 2003, with many of the other antidepressants following closely behind. The entry of generic competition will drive the prices of these agents down, even as their manufacturers attempt novel methods of extending their brand identity. For example, both Eli Lilly and Forest Labs have obtained use patents for stereochemically-pure isomers of their products, fluoxetine and citalopram. These products are currently in clinical development, and their ability to extend brand life will largely depend on the extent to which they exhibit any improvement in therapeutic profile. Eli Lilly is also testing a combination product containing both fluoxetine and olanzapine to be used in severe and/or atypical depression.
The formularies used by health care payers is changing from a list of approved drugs that can be reimbursed to a list of preferred drugs that will be reimbursed automatically without question or paperwork. Rarely is reimbursement denied for a non-formulary drug if the consumer or provider is persistent. However, the extent to which this "hassle factor" prevents consumers or providers petitioning for off-formulary coverage is unknown.
This change in the character of formularies has been possible as many drug classes have several competing agents that offer arguably similar mechanisms of action. Therefore, for example, some formularies include a choice of only one or two SSRIs for automatic reimbursement based on the argument that all SSRIs "are the same." This argument is applied to numerous other drug classes as well, although the differential efficacy of particular agents within other drug classes is often more clear-cut.
It is commonly asserted that response to psychotherapeutics by an individual is idiosyncratic and there is no way of predicting a priori whether any one agent from a class is more likely to work in a particular individual than is another. If this assertion is true, then the interpretation and policy implications will differ depending on the perspective considered. From one perspective the use of preferred drug lists is likely to compromise the quality of mental health care because the preferred agent will not work in all eligible populations. From another perspective, use of a preferred drug list is justified because it is impossible to know whether the preferred agent will be effective in a particular patient until it is tried. Nonetheless, given that there is at least some evidence that restriction of therapeutic options to only one preferred agent is detrimental to outcomes in the treatment of depression, this formulary effect (independent of specific agent) is fertile ground for further rigorous research.13
The introduction of three-tiered copayment systems represents a significant shift in how cost-sharing is applied to pharmaceutical benefits. Alongside a general increase in the level of cost-sharing required, these systems give a higher level of choice to the consumer in making pharmacotherapy decisions. Whereas in the past, the only difference in cost-sharing was between generic and branded products, three-tiered systems allow consumers a choice between two types of branded products: preferred and non-preferred. Consumers will be reimbursed for non-preferred products, but the cost-sharing required to obtain these products is significantly higher than for preferred products. Therefore consumers are allowed to make a value tradeoff on their own: is the difference in preference, efficacy, or side effects worth the difference in cost.
Although three-tiered copayment plans currently proposed cut across all drug classes, it is reasonable to assume that these plans will have a more significant impact on any group of patients who have one or more chronic, debilitating illness, such as a mental illness. This is because patients may be required to incur the higher levels of cost-sharing for one or more maintenance medication in addition to the cost sharing incurred for prescriptions to treat acute conditions.
Debate continues to rage over guaranteed "parity" in insurance benefits for mental health treatment. Generally, insurers and employers resist parity along with all mandates. Advocates promote parity as a matter of equity for people who happen to suffer from a mental rather than physical form of illness, and also argue that such coverage would increase productivity and reduce costs (e.g., for physical health care, disability benefits).
Nationally, a limited form of parity was enacted in 1996, prohibiting group health plans that offer mental health benefits from imposing more restrictive annual or lifetime limits on spending for mental illnesses than they do for physical illnesses. To date, this law -- which took effect January 1, 1998 -- does not appear to have raised employer costs or tightened benefit packages in any significant way. Some plans may have countered the law through more restrictive day/visit limits or reductions in reimbursement rates for providers. Advocates continue to pursue expansions of the law, particularly to include substance abuse and to prohibit differential co-payment requirements or day/visit limits. The Administration is supportive, but will not push the issue until after Congress considers The Patients' Bill of Rights legislation (see below). The legislative outlook for expansion of parity is probably weak in the short term, but it will continue to be pursued over time. The outlook for expansion in Federally-controlled programs (e.g., Federal employees, Department of Defense) is more positive. The Federal Employee Health Benefits Program is scheduled to require parity beginning in 2001.
At the same time, individual States continue to consider and implement parity in varying forms. This legislation is an extension or alternative to the mandated minimum mental health insurance benefits that many States enacted or considered in the 1980s. To date, at least 28 states have enacted some form of parity. The chief differences concern whether the coverage includes substance abuse/chemical dependency services, only "severe mental illnesses," or all mental health conditions. In addition there is variation in the population covered by the parity legislation, ranging from most insured people to only a limited population (e.g., state employees).
Parity legislation may inadvertently pose threat to coverage of all FDA-approved psychotherapeutics. Plans that engage in aggressive formulary management of other drug classes may be able to use a parity argument to do the same for psychotherapeutics. The net result may be a less comprehensive selection of psychotherapeutics being reimbursed than had been previously.
Resistance to managed care has centered on the restriction of patients' choice of plan and provider; on plans' denial of services or reimbursement; and on plans' continual reduction of provider reimbursement rates. Both Congress and most state legislatures continue to consider Patients' Bill of Rights legislation as a way to ensure some level of quality of care. The President's Commission on Consumer Protection and Quality drafted a bill of rights in 1997, which has been mandated for all Federal agencies administering or managing managed care programs, and the Administration has made Congressional enactment of a strong bill of rights a high legislative priority. While Congress rejected such legislation in the last session, they have responded to continuing public pressure by again introducing more limited bills, and some action may be taken leading up to the next election.
Mental health is a leading source of egregious examples of managed care "abuses." Plans are thought to use a highly restrictive definition of "medical necessity" to limit or deny mental health treatment, especially inpatient care. Choice of providers, access to specialty providers, and confidentiality are highly sensitive issues in mental health care, particularly for individuals with long-term or chronic conditions. Moreover, experienced specialty mental health providers -- particularly those accustomed to public sector grant funding -- have had difficulty adapting to managed care contracts and reimbursement structures. All of these concerns are subsumed within the "quality" and "patients' rights" issue.
At the same time, several managed care organizations have removed prior approval requirements designed to ascertain "medical necessity." These restrictions were usually applied to procedures and hospital inpatient admissions. However, in some cases pharmaceuticals are included in these regulations. It appears that managed care plans are beginning to adopt a less adversarial role in controlling utilization, moving instead to a role of physician education and assuring quality.
Managed care has contributed significantly to reducing mental health's share of the premium dollar (in private insurance) as well as to a fundamental restructuring of the public system, with a similar loss of visibility and importance for mental health within state governments. As a result, the constituency has less clout in demanding quality. However, the constituency is very experienced in challenging the public care system, and would be active users of any grievance/appeal and litigation options that are enacted to protect managed care consumers.
Pharmaceuticals play into these issues in several ways. First, the mental health constituency demands the latest and best medications as a key element of quality. Second, new medications are recognized as a major factor in cost increases -- particularly in mental health (with a high incidence of new drugs available). The mental health constituency is very concerned that cost pressures (with the reduced premium share or funding for mental health) may encourage managed care plans to replace clinician time with medication. An increasing concern will be whether the costs of mental health medications come out of the shrinking mental health portion of the premium/capitation rate, or out of the overall health dollar.
It is not at all clear, however, that psychotherapeutics will be alone in terms of pressure to reduce costs. Psychotherapeutics are generally considered as one of five major pharmaceutical cost centers that also include anti-infectives, cardiovascular, gastro-intestinal, and analgesics. One may expect that as the population ages, most of these categories will encounter increasing pressure to control costs as the number of patients who are candidates for these drugs increases (especially cardiovascular and gastro-intestinal agents). Although cardiovascular and gastro-intestinal drugs are potentially capable of reducing the volume of expensive medical procedures (e.g., coronary artery bypass graft, percutaneous transluminal coronary angioplasty, or endoscopy), the effects of such shifts (should they occur) remain equally unclear.
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Last updated August 20, 2000