Wasting the Taxpayers Medicaid Dollars on Psychiatric Drugs

by Janet Parker in OpEdNews.com

Let us remember that the amount of money you spend on medical care does not necessarily equate to quality care — medical fraud like a hidden greedy parasite saps the lifeblood of our public health system.  As we restrict preventative medical care to the poor and needy we are expanding the use of psychiatric drugs exponentially to include an ever increasing percentage of our population on these addictive lifelong mind-altering medications.  As a nation, we must not only look to the human rights ethics of whether psychiatric drugs should be prescribed with such frequency but also consider the ultimate cost to our nation’s health care budget. Should we not question whether behavioral/social support systems, non-drug therapies, psychotherapy and other possible treatments should be the first line of action, rather than reaching for a pill that will doom a patient to lifelong treatment with expensive and often dangerous medications?

There have been double-digit increases in yearly Medicaid drug spending with psychiatric drugs representing the largest percentage of that cost. [i]     Psychiatric medications are among Medicaid’s most costly and commonly prescribed drugs. [ii]    While Medicaid officials (many former pharmaceutical industry employees) reported concerns about the effects of restricting access to drugs for those with serious mental illnesses, such as schizophrenia, but these officials do not seem adequately concerned about the growing numbers of adverse effects, episodes of violence, fatalities and suicides on these medications.  Side effects of psychiatric medications can include seizures, low blood pressure, irregular heartbeat, diabetes, tardive dyskinesia (a neurological disorder characterized by involuntary movement), and other extrapyramidal symptoms (neurological side effects).

In 1998 antidepressants and antipsychotics accounted for nearly 9 percent of Medicaid prescriptions and nearly 19 percent of Medicaid drug reimbursements. [iii]   In an effort to curtail medical costs individual states have adopted various strategies including policies that require failure on a generic drug before any brand-name drug can be used. For example three states require failure on another antipsychotic before Clorazil may be used, and two have a similar policy for Zyprexa. But the pharmaceutical lobby has kept Medicaid payments high by exempting psychiatric drugs from these restrictions and also mandating Medicaid payment when the patient cannot cover the co-pay.

The story of whistleblower Allen Jones, is instructive in showing how the pharmaceutical industry and the for-profit entrepreneurs in the medical community have held the taxpayer and the health care consumer captive and paying for services and drugs that increase profits for the few and bankrupt our medical care service. Allen Jones was employed as an Investigator in the Commonwealth of Pennsylvania Office of Inspector General (OIG), Bureau of Special Investigations.  In 2002 Allen Jones attempted to expose evidence of major pharmaceutical company wrongdoing related to the Texas Medical Algorithm Project — a psychiatric drug marketing program. [iv]

Former PA Office of Inspector General investigator, Allen Jones estimated that based on a national population of 250 million Americans, the annual costs to the Medicaid programs would balloon to approximately 3.7 billion dollars per year to treat schizophrenia alone. That is over ten million dollars per day just in Medicaid expenditures for schizophrenia drugs.  The costs of these psychiatric medications have shifted from the state governments to the federal government and the Medicaid program.  This was accomplished by the Medicaid Improvement Act of 2003.  Despite recent efforts to control spending, Medicaid programs generally offer broad drug coverage. Many states specifically exempt psychotropics from some or all of their prescription access restrictions. (Exemptions For Psychiatric Medications In State Preferred Drug List (PDL) Policies)   Prescription copayments are nominal, and more importantly prescriptions cannot legally be withheld if a beneficiary cannot pay the copayment. Even if the patient has no insurance coverage, and does not have the ability to pay — the federal taxpayer will pick up the tab. This is a dream come true for pharmaceutical marketing and sales executives.  This amounts to an open check book into the taxpayer funds for Medicaid payment for psychotropic drugs with little or no oversight and no medical or fiscal transparency.  With the vulnerable mental patient often a ward of the court and decision making happening behind closed doors, it should not surprise us that maximizing profit and minimizing costly personal care are the goals.

The Texas Medication Algorithm Project” (TMAP) began in Texas in 1995. The Texas Medication Algorithm Project has already generated many billions of dollars in sales for the pharmaceutical industry in the United States. TMAP was described by Allen Jones as a Trojan horse embedded with the pharmaceutical industry’s newest and most expensive mental health drugs. Allen Jones through his investigation exposed that through TMAP, the drug industry was methodically compromising the decision making of elected and appointed public officials to gain access to captive populations of mentally ill individuals in prisons and state mental health hospitals.  The drug companies involved in financing and/or directly creating and marketing TMAP include: Janssen Pharmaceutica, Johnson & Johnson, Eli Lilly, and Austrazeneca, Pfizer, Novartis, Janssen-Ortho-McNeil, GlaxoSmithKline, Abbott, Bristol Myers Squibb, Wyeth-Ayerst Forrest Laboratories and U.S. Pharmacopeia.  Janssen Pharmaceutica has operated a very aggressive specialty sales division devoted entirely to public sector marketing.

Allen Jones’ report indicated that key administrative governmental regulatory employees in Pennsylvania were closely aligned to drug manufacturers, including: 1) Charles Currie, Deputy Secretary, Office of Mental Health and Substance Abuse Services; 2) Steven J. Fiorello, Director of Pharmacy Services, Office of Mental Health and Substance Abuse Services; 3) Steven J. Karp DO, Medical Director, Office of Mental Health and Substance Abuse Services DPW.  These officials working in cooperation with pharmaceutical industry insiders manipulated the regulatory agencies to turn a blind eye to the excessive profits of the pharmaceutical companies and to permit wholesale marketing at taxpayers’ expense of psychotropic drugs.

Research into the dangers of the increased use of psychiatric medications recommended by the TMAP has been suppressed. Instead the pharmaceutical industry bypassed governmental safeguards and medical review by using political pressure on select governmental officials.  To maximize profits for the pharmaceutical industry doctors are encouraged or pressured by TMAP to treat their patients with the newest, most expensive drugs patented by the pharmaceutical companies.  The use of generic drugs is discouraged. TMAP claims to be supported by evidence but in reality TMAP was created by the pharmaceutical industry leaders as a marketing tool with little valid scientific research to back TMAP recommendations.  In reality, the FDA was pressured to overlook clear dangers of medications in the TMAP model and to continue to allow drugs to be sold to vulnerable patients with serious and even fatal adverse effects Doctors not prescribing by the TMAP model face blacklisting, bad faith peer review and whistleblower retaliation. The newer drugs had often not had extensive clinical trials therefore the full dangers of the medication and possible adverse side effects were often unknown or even not reported.  Research studies delineating concerns for the newer drugs’ safety and efficacy were suppressed.

Mental health care has evolved into a revolving door between state mental hospitals and prisons, where patients flow through these facilities and leave with prescriptions for the medications they were treated with while institutionalized. Most of these patients will rely on Medicaid or Medicare to pay for the drugs. Forcing prisons and state mental hospitals and other community mental health centers to prescribe medications based on a pharmaceutical industry marketing model permits “patient recruitment and retention” in pharmaceutical industry terms.

Secrecy, lack of transparency and lack of accountability makes a perfect environment for human rights violations of the mentally disabled.    Problems of patient abuse occur including: excessive dosing for purposes of chemical restraint, poly-pharmacy with multiple medications, lack of informed consent and the use of medication with little or no direct doctor/patient contract.  In addition the use of medication with no real oversight of the process of diagnosis means that patients can often not question the use of these medications because surrogate decision makers have been assigned by the court to make all medical decisions.  Wards in mental health care have often been stripped of their legal rights and thus cannot assert their objections to treatment decisions.  Unbiased independent review of medical charts is almost non-existent.   Patient human rights have been ignored and there is no direct process to bring guardianship abuse or doctor/proxy/decision maker abuse to the attention of the court.  These drugs do not live up to their marketing promises but instead have been to cause serious, even fatal side-effects, particularly in children and the elderly. Lives of some our most vulnerable citizens have been irreparably damaged and many have been lost to fatal adverse effects and even to suicide.

From Allen Jones’ report – Issues the OIG chose to overlook:

Janssen Pharmaceutica may have violated AMA Guidelines, FDA Guidelines, Federal Health and Human Services OIG guidelines and federal anti-kickback laws in that:

  1. Janssen made direct payments of money to state officials for representing Janssen products. The remuneration was far in excess of “reasonable value” ($2,000 for – day presentations) and was made to officials who were in a position to influence the state drug formulary.
  2. Janssen provided trips, entertainment and meals directly to the persons who were in key positions to accept or reject Janssen’s product in the state formulary.
  3. Janssen influenced, to the point of control, the content and materials in which Janssen had provided “educational grant” funding.
  4. Janssen selected speakers for “educational grant” funded symposiums and paid travel expenses and honorariums to these speakers.
  5. Janssen, through these symposiums and through direct contact with Pennsylvania officials, encouraged doctors to prescribe drugs in dosages that were not FDA approved.
  6. Janssen, through these symposiums and through direct contact with Pennsylvania officials, encouraged doctors to prescribe medications for non-FDA approved indications.
  7. Janssen conspired with commonwealth employees to obtain data generated from the non-FDA approved activities.
  8. Janssen funded travel and expenses for commonwealth employees to represent Janssen in the employee’s official state capacities.
  9. Janssen’s cooperation with other drug manufacturers in the advancement of TMAP has clear Anti-Trust and Racketeering implications.  In addition to the drug company impropriety, the OIG had solid evidence that employees in addition to Fiorello had engaged in the same conduct. Yet Fiorello was the only one investigated and recommended for prosecution. Information provided to the OIG clearly established that state employees were experimenting on mental health patients and reporting the results to drug companies, yet this was not even mentioned in their report.

Least you believe that Janssen was alone in this deceptive marketing, realize that Eli Lily has already paid $1.4 billion in a recent settlement over Zyprexa.  Johnson & Johnson, Pfizer, and GlaxoSmithKline have all paid millions in fines in similar cases.    Big Pharma spends millions on lobbying Congress to effect changes in legislation favorable to the pharmaceutical industry’s bottom line.    Eli Lilly and Merck were both exposed for having their own employed staff ghostwrite scholarly articles about their drugs for peer reviewed journals and asking other doctors to deceive the public by putting their names on the articles.    Eli Lilly marketed the anti-pyschotic drug Zyprexa to elderly patients with dementia, despite medical evidence that the drug didn’t help those patients and hid the weight gain and diabetes often caused by that medication. Lilly’s promotion of Zyprexa for dementia went against no less than seven reputable medical studies.    This marketing practice is called “off-label promotion.”    It is the practice of marketing drugs for purposes not backed by science and recently has come under increasing scrutiny by the Department of Justice.    Those in charge of our nation’s finances need to wake up and pay careful attention to the exponentially expanding Medicaid payments for psychiatric drugs with little scientific evidence that they are medically appropriate and effective for the purposes prescribed.  We need to do research into non-drug options and provide adequate funding for alternative treatments and therapies.


[i] 1. B.C. Strunk, P.B. Ginsburg, and J.R. Gabel, “Tracking Health Care Costs: Growth Accelerates Again in 2001,” Health Affairs, 25 September 2002, content.health affairs.org/cgi/content/abstract/hlthaff.w2.299 (14 December 2004); and Kaiser Commission, Medicaid: Purchasing Prescription Drugs, Policy Brief, Pub. no. 4025 (Washington: Kaiser Commission, January 2002).

[ii]    L. Elam, B. Bruen, and J. Tilly, “Medicaid and the Prescription Drug Benefit: Cost Containment Strategies and State Experiences” (Washington: Kaiser Commission, September 2002).

[iii]    C. Harrington et al., “Access and Utilization of New Antidepressant and Antipsychotic Medications” (Falls Church, Va.: Lewin Group, January 2000).

[iv]     Jones, Allen, “Introduction to the documents on Big Pharma Corruption in Research & Clinical Trials,” Revised January 20, 2004,    This important document has been posted on the Internet by the Law Project for Psychiatric Rights (http://psychrights.org/), a non-profit dedicated to fighting the scourge of forced psychiatric drugging.

Medical Whistleblower is an organization dedicated to advocacy and emotional support for those who have bravely stepped forward to “Tell Truth to Power” to the Medical Establish.  Medical Whistleblowers report Medical Fraud, Abuse and Neglect to State and Federal Agencies. Medical Whistleblower advocates for those who are defenders of human rights.  Medical Whistleblower is a not for profit organization located in Lawrence KS.  Medical Whistleblower provides educational programs for the public, educational materials and brochures, publishes Canary Notes Newsletter, and provides advocacy through raising public awareness and public participation in the democratic process. The Executive Director of Medical Whistleblower is Dr. Janet Parker DVM.

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