Lilly Will Discount Drugs for Elderly As Industry Looks to Dodge Controls
By THOMAS M. BURTON
Staff Reporter of THE WALL STREET JOURNAL
The pharmaceutical industry's effort to stave off government-negotiated drug-price controls will receive another push Tuesday when Eli Lilly & Co. announces a plan to make medicines available to low-income older Americans for just $12 a month.
The Lilly drug plan, to be made public at a news conference featuring Health and Human Services Secretary Tommy Thompson, would be the lowest-cost industry plan yet. It requires only the $12 monthly payment for major therapies like Humulin and Humalog for diabetes, osteoporosis drug Evista and Zyprexa, the $3-billion-a-year psychosis drug used for dementia in the elderly.
The Lilly plan appears to undercut substantially discount plans announced last year by Novartis AG and GlaxoSmithKline PLC. It is slightly cheaper than a Pfizer Inc. plan announced in January that would provide drugs at $15 a month. For the industry, the question is whether the combined efforts of those players will suffice to diminish talk in Congress of establishing mechanisms to control the price of drugs for older Americans.
The Lilly plan is called LillyAnswers and is expected to go into effect at pharmacies next month. It applies both to people with disabilities who are in the Medicare insurance program, and to people over 65 with an annual income below $18,000 per individual or $24,000 per household. The Indianapolis company says the program will apply to more than five million Americans and could save participants an average of $600 annually.
But few think such a plan provides a comprehensive solution for all older Americans who cannot afford their prescriptions for medicines.
PRICE CUTS
Companies with low-cost drug plans for seniors and some discounted drugs:
• Eli Lilly: Evista (osteoporosis), Humulin (diabetes), Zyprexa (antipsychotic)
• Pfizer: Zoloft (antidepressant), Norvasc (blood pressure), Lipitor (cholesterol)
• GlaxoSmithKline: Avandia (diabetes)
"This is a pretty tight definition" of who qualifies, says John Rother, policy director of AARP, which represents millions of older retired and working people. "It's a relatively small piece of the group who have no drug benefit." He estimates that perhaps two million older people, out of about 12 million who lack prescription-drug insurance coverage, might qualify for the Lilly plan.
Even so, Mr. Rother says, the Lilly plan "is raising the bar about how generous these plans are."
In an interview, Lilly Chairman Sidney Taurel says, "We decided it was time for us to step in and assist the neediest of people on Medicare." He adds: "We definitely support a drug benefit for all seniors. We are just being realistic that there is no guarantee something will be enacted this year." He estimates that more like five million people may be eligible for the Lilly plan.
Mr. Taurel says the pharmaceutical industry's opposition to a government program isn't to a prescription-drug benefit for older Americans, but rather to one that would involve government purchasing power and price controls.
Lilly estimates that a person who needs the osteoporosis drug Evista could save more than $600 a year under the program and that a diabetic using Humulin could save about $400 annually. The company says that elderly and disabled people enrolled in Medicare can apply for a discount card by calling 1-877-RX-LILLY and that the application process will take two to four weeks. It says pharmacies can elect to accept the card beginning April 1, and a person will be covered for 12 months.
Chris Jennings, a health-policy consultant and former Clinton-administration senior health-care adviser, says the program could benefit the needy elderly, but he adds, "There is no time commitment as to how long these plans are in place." Moreover, he says, more than half the elderly won't qualify for the Lilly plan.
"Middle-income seniors will not be benefited," says Mr. Jennings. "The history of a lot of these programs is they get a big bang, but the effort to reach people and enroll them isn't as great as the effort to publicize these programs in the first place."
Lilly's plan comes just days after the Bush administration released a modified drug-discount-card proposal for Medicare recipients. In it, pharmacy-benefits management companies would negotiate with drug companies in an effort to drive down drug costs for the elderly. Health-care consumer groups have expressed skepticism that such a program would provide enough discounts, and the National Association of Chain Drug Stores and National Community Pharmacist Association filed suit against an earlier version of the White House program.
But NACDS President Craig L. Fuller praises Lilly's initiative as one offering "meaningful benefit." Even so, he says, the government still needs at least to provide "catastrophic" drug-benefit coverage for older people who become extremely ill and face unaffordable drug costs.
In prepared remarks, Secretary Thompson says that the pharmaceutical industry's and the administration's plans for low-income older Americans are only part of the solution and that ultimately a plan to lower drug costs for all older people will be needed. "The president's proposed drug-discount card is a first step," the secretary says, further describing that step as "a very important one in the process of providing real reduction in prescription drug costs."
Write to Thomas M. Burton at tom.burton@wsj.com
Updated March 5, 2002
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