from the NY Times:
July 11, 1998
ANALYSIS
Breaking the Cost Taboo on Viagra
By MICHAEL M. WEINSTEIN
Health plans cite lots of reasons for denying coverage of specific drugs
and procedures. The procedure can be labeled cosmetic (breast
reconstruction) or medically unnecessary (in-vitro fertilization). The
remedy might be called experimental (bone marrow transplants) or
dangerous (some diet pills). But there is one reason that health plans
never cite: cost.
Indeed, David Eddy, an expert on medical technology who advises many
medical organizations including Kaiser Permanente, has coined the term
"cost taboo" to express the prevailing notion that costs should not
affect treatment decisions.
But earlier this month, Kaiser, the California-based health plan that
covers more than 9 million people across the country, shattered the cost
taboo when it refused to cover Viagra, the wildly popular new pill from
Pfizer Inc. that treats male impotence. In doing so, it cited the cost
-- and no other factor.
Kaiser's candor was uncharacteristic for health plans, which often
restrict or exclude treatments because of costs without saying so.
Kaiser conceded that impotence is a medical condition. It conceded that
Viagra is an appropriate medical treatment. Ordinarily, those stated
concessions settle the matter. Cigna, Oxford and several other plans
have decided to cover at least six of the $10 pills a month.
But Kaiser said no. It estimated that this one drug would drive up its
pharmaceutical bills by about 10 percent, or about $100 million a year
-- far more than it spends on all antiviral drugs, including the
expensive "cocktails" taken by AIDS patients.
The problem for Kaiser is that is has no easy way to distinguish the few
males whose impotence is caused by physical malady and the large number
of males that it expects will demand Viagra to recapture the sexual
frequency of their youth or achieve a frequency they deem desirable.
After a formal review process involving 40 health-care experts inside
and outside the organization, Kaiser decided that it would not raise
premiums for all its members to pay for treatment of a nonlethal,
noncrippling condition that almost all of its members could afford to
treat on their own. Instead it will offer its corporate customers an
option to buy a policy covering Viagra at a premium that will compensate
for the extra costs. That way other enrollees are spared a financial
hit.
Kaiser's announcement was blunt and carefully considered. But was it
proper?
Some health care experts think not. Jamie Court, director of Consumers
for Quality Care, a watchdog group in Southern California, condemned
Kaiser's decision by pointing out that Kaiser was cutting treatment for
impotence even as it was increasing its advertising and marketing
budgets. The big threat, other critics say, is that American health care
will move to a two-tier system, one for those who can afford what they
want and a lesser system for everyone else. California officials are
investigating whether a state law that requires physicians to make
decisions without regard to costs applies to this case.
But other policy experts applaud Kaiser's decision. Arnold Relman,
former editor in chief of the The New England Journal of Medicine, and
Alain Enthoven of Stanford University, a leading advocate of managed
health care markets, welcome Kaiser's assault on the cost taboo because,
they say, in a world of limited resources, the act of showering money on
hugely expensive treatments of secondary importance denies money for
treatments of primary importance.
Though they cannot say so publicly, medical directors of health plans
recognize that treatment decisions already reflect costs, even if the
plans invoke code words -- experimental, cosmetic or risky -- to mask
their motives. Several plans, including those of Prudential Healthcare
and Humana Inc., announced that they would not cover Viagra because of
concern for its safety, a reason that Relman dismisses as "hypocritical"
because, he said: "We all know it is an economic decision."
Enthoven hopes that Kaiser's frank approach will "provide cover" for
health plans to limit costly high-technology treatments that do some
good but also threaten to drive insurance premiums to unaffordable
levels.
David Eddy points to examples that cry out for cost-sensitive decisions.
His research shows that one drug, which would cost several hundred
dollars a year, can decrease the chance that a typical 55-year-old woman
will suffer a hip fracture by about one in 7,000. One of two liquids
that can be used for internal X-rays, when introduced, cost 15 times the
alternative, but cut the risk of a nonfatal reaction by only about one
in 2,000 patients. New types of pap smears would about double lab
charges but, if administered annually, would increase the life
expectancy of women by only about seven hours.
Eddy asked "whether health plans should pay for these higher-cost
procedures using shared resources, or should patients who want the
costlier tests pay the extra money themselves." In the case of Viagra,
Kaiser answered no, deciding that the benefit of the new drug was not
worth the increased costs to its members. The risk is that some people,
especially the poor, will go without effective treatments of nonlethal
problems. The risk in answering "yes" to Eddy's question -- covering
every innovation that works -- is that insurance premiums will soar.
Many employers will drop coverage and, as recent surveys document,
workers will drop offers of coverage in exchange for higher wages.
Whatever the pros and cons of Kaiser's decision, it focuses attention on
inescapable trade-offs that do, and will, plague every health plan.
Should plans cover growth hormones only for children with well-defined
genetic miscues or extend treatment to children who are genetically
normal but happen to be extremely short? Should health plans cover
potentially expensive drugs that might come along to combat memory loss
associated with aging?
Beyond these tough questions lurks another. Who should make these
coverage decisions? Now, health plans are told to offer complete
coverage at affordable prices and, by the way, ignore costs when
tailoring policies. Little wonder that they resort to circumlocutions.
Another alternative would have government define the basic benefit
package, explictly confronting the trade-off between generous benefits
and steeper costs.
The Viagra decision was made easier by the fact that impotence threatens
no one's life and the remedy, $10 a pill, is within the financial reach
of most Kaiser members. Even still, reactions were sometimes furious.
The cases to come will no doubt grow ever more difficult. |
