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

Mental Health Parity Laudable, But House Legislation Would Put Medicaid Patients at Risk, Lilly Says
March 5, 2008

Provisions of HR 1424 could reduce access to necessary medications for thousands of Americans
INDIANAPOLIS, March 5, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- 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