Lilly Drops Its Prescription Assistance Program for the Poor

In a little-noticed move, Lilly has dropped “Lilly Answers,” its Patient Assistance Program for people without health insurance. Merrill Lynch’s David Risinger noted that ending the free-drugs-for-poor-people effort may have helped goose Lilly’s 1Q numbers.

“Eli Lilly reported 1Q pro forma U.S. sales up 11% YOY, including 10% net price and 1% volume.  The net price benefit was surprising because the transition of dual eligibles (Medicaid to Medicare) annualized January 1, 2007.  We think a key factor was less free goods due to the ending of the 'Lilly Answers' patient assistance program on December 31, 2006.  Many prescriptions previously filled under that program are now covered by payers (particularly Medicare Part D), which boosts realized net price dramatically in some cases (i.e. Forteo).”

Risinger, writing in a note to investors, continued:

“Ending of Lilly Answers helped price but hurt volume; ‘Lilly Answers,’ a program to provide pharmaceuticals to low income individuals, was shut down on December 31, 2006.  Many prescriptions were transitioned to Medicare Part D and other funding sources, which compensate Lilly at a dramatically higher level for prescriptions.  Hence, Lilly is realizing a significant net price benefit in 2007 (vs. 2006) for a number of products (in particular Forteo).  But volume growth has been somewhat impacted since some individuals have not filled prescriptions following the ending of Lilly Answers.”

Then Risinger asks, “Why did Eli Lilly drop Lilly Answers? The program was ended due to new Medicare Part D rules.  But Lilly did replace it with another program in January 2007 called ‘Medicare Answers,’ which covers three products -- Forteo, Zyprexa, and Humatrope.  Note that Medicare Answers is a smaller operation supporting a fraction of the Lilly Answers volume.”

Only three products? That won’t cheer up any of Lilly’s patients who are on Prozac, now will it?

The move is a controversial one because in the debate over whether drug companies deliberately keep drug prices high—thus raising the cost of healthcare—thus causing 40 million Americans to not have health coverage—etc., etc.,—drug companies and PhRMA have traditionally pointed to their Patient Assistance Programs as proof that they’re not cold-hearted money-grubbers.

Now it’s only a matter of time before other Big Pharma CFOs see Lilly’s improved numbers and ask, Hey, what if we kicked the poor off the boat, too?

Comments

[John Mack]

While it may be true to say that Medicare Part D rules prohibit drug company PAP programs, companies can and have had their PAP programs approved by the OIG as pointed out below (see http://www.medicareadvocacy.org/PartD_05.2006.PAPs.htm).

"PAPs operating outside of Medicare Part D that offer free or reduced-cost prescription drugs - mostly to persons with low incomes and no insurance - may still be able to offer assistance to Medicare beneficiaries, according to an advisory opinion released April 18 by the Office of the Inspector General (OIG) [OIG Advisory Opinion No. 06-03]. The opinion warns that its approval applies only to programs offered by the company that requested the opinion (Schering-Plough), and urges each individual PAP to seek an approval, rather than use this advisory opinion as guidance.

The continued existence of PAP assistance for Medicare beneficiaries was put into question recently with the strict rules governing pharmaceutical companies’ ability to contribute to beneficiary’s drug costs without violating the anti-kickback statute. That statute prohibits offering or receiving payment to increase the use of products or services (in this case, to steer prescription drug use) at the cost of federal health care programs. The latest opinion offers qualified confirmation that PAPs are permissible provided they function within certain parameters, while pointing out that that PAP drugs will not count toward an individual’s Medicare Part D true out-of-pocket (TrOOP) costs and cannot be billed to any third party, including Medicare."

[Dr. Black Kitty]

In actuality, Lilly FIRST made the program very limiting, in terms of income level for the participants. Then, they essentially unofficially eliminated everyone from their programs. Now, the officially dropped the program. This was going to happen. No one cared. No one protested. And now it is actualized.

How do I know this? I enrolled my father in their program. And they dropped him, after years of providing him with medications, 2 years ago, before he died. This was because my RETIRED and not at all wealthy parents, made too much money, and supposedly had other Rx coverage. BS.

[Timothy M. Brown]

I think what you and other companies that will follow your course have no respect for life or the welfare of the people and these things should not be permitted. I work in the medical field at a clinic which provides healthcare to the poor. It is things like this that is bringing us closer to failure. I hope you can sleep at night knowing that you don't have to worry. I pray that you never get poor............

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