Stephenie Overman. HRMagazine. Volume 43, Issue 10. September 1998.

From the nightly news to cocktail parties, everyone is talking about Viagra—the new male impotence drug that exploded onto the market six months ago.

But (discussion about this wondler diu is going far beyond light party talk to serious debates over gender equity, safety and costs. Insurers must settle these questions before deciding whether or it they should cover Viagra, or risk opening themselves up to legal challenges, experts warn.

For self-insured companies, the enormous demand for Viagra adds a new dimension to the decision-making process. In a tight labor market, some experts say it may be worthwhile to cover Viagra as a noncash benefit to retain valuable employees.

The stakes are high. Research indicates that an estimated 20 million men in the United States over the age of 40 are affected by impotence. The average price of a 100 mg Viagra tablet is $8 to $10, and the recommended dosage is six or more tablets a month. Almost half of the 300,000 men taking Viagra each week are reimbursed, at least in part, by health insurers, according to IMS Health, an industry research group in Plymouth Meeting, Pa.

But that may be temporary.

Citing prohibitive costs, Kaiser Permanente, the country’s largest nonprofit HMO, announced that Viagra only will be available at an additional cost to employer groups or to individuals who pay full price at Kaiser pharmacies. According to Kaiser officials, allowing patients 10 pills a month would have cost the company more than $100 million a year-more than 50 percent higher than it spent last year for antiviral drugs, including treatment of HIV.

Aetna U.S. Healthcare also said it will not cover the drug, except as an option at an extra cost, estimating that covering Viagra would have added $50 million a year to its costs.

Safety is the latest concern to arise in the debate over Viagra coverage. Prompted by the deaths of at least 30 Viagra users, Prudential HealthCare and Humana Inc. decided not to reimburse patients for Viagra. Pfizer Inc., which manufactures Viagra, called their decision irresponsible and lacking any basis in fact. Pfizer and the U.S. Food and Drug Administration, which approved the drug, argue there is no direct link between Viagra and the deaths.

The United Healthcare Corp. is undergoing a formal review process to look at all these factors before it makes a final decision. In the interim, it is paying for eight pills a month.

Insurers covering the drug include Blue Cross/Blue Shield plans in Indiana and California, Harvard Pilgrim Health Care, and the Defense Department’s health plan, according to Pfizer. The Clinton administration ordered the states to cover Viagra under Medicaid, the government insurance plan for the poor and disabled, when medically necessary. Some state governors have vowed to fight the directive.

To Cover or Not to Cover

Decisions about covering Viagra “are all over the map,” says Michael Flagstad, senior vice president and chief clinical officer at St. Louis-based Express Scripts/ ValueRx, which manages prescription programs for employers, HMOs and insurance carriers.

“Some are covering, some are not,” says Flagstad, who also is a pharmacist. “Some require prior authorization. Some are covering [Viagra] for certain medical conditions. We’re recommending six tablets per month,” based on research done by the New England Journal of Medicine.

Another consultant, Arthur Shinn, finds that almost half of corporate plan sponsors are excluding Viagra on a temporary or permanent basis. Most HMOs have excluded Viagra from coverage or limited the number of pills patients may receive.

“Quantity limits are common,” says Shinn, who is a pharmaceutical specialist at William M. Mercer, a management consulting firm in New York. “We’re most commonly seeing six to eight tablets [per month] using prior authorization-a procedure whereby medical necessity is confirmed. Also, there may be age restrictions or requirements for prior authorization by certain specialists for patients under certain ages.”

Companies with outside health insurance plans pay their premiums and delegate the decisionmaking process to the health plan. But selfinsured companies pay their own costs and will decide whether to exclude coverage of Viagra.

“We make recommendations to our customers,” Flagstad says, “but it’s their employees or their members. They have the fiduciary responsibility.”

A survey conducted by the Henry J. Kaiser Family Foundation (not affiliated with Kaiser Permanente) did not find overwhelming public demand for Viagra coverage-at least not yet. Of those polled, nearly half thought insurers should cover Viagra, while 40 percent said they shouldn’t and 11 percent said they didn’t know.

A Medical Necessity?

Deciding whether to cover Viagra may be as easy as determining whether it is a “lifestyle” drug—one that improves the quality of a person’s life but is not a medical necessity. If you cover lifestyle drugs and treatments—such as growth hormones, in vitro fertilization or weight loss pills—you would probably cover Viagra.

But that may be easier said than done. There is little consensus among health care experts on how to classify Viagra.

Brian Kolling, a pharmacist and manager of Express Scripts/ValueRx’s drug evaluation unit, considers Viagra a lifestyle drug because “if Viagra is not taken, it does not result in any additional health risk.”

But Richard Sinni, a health care consultant at Watson Wyatt Worldwide & Co. in New York, warns that companies may incur additional costs if they consider Viagra a lifestyle drug. He explains that sometimes a drug developed for one reason, such as treating prostate cancer, may be used for a cosmetic reason, such as preventing hair loss. Or, a person who may not have a health-threatening weight problem may take obesity medication for cosmetic or lifestyle reasons. That’s why it is important to require prior authorization.

“Human resource managers should be concerned about abuse and the cost associated with it,” Sinni says. “They [also] have to be concerned with the medical implications of people taking Viagra and abusing it,” he adds, noting the recent deaths allegedly linked to the drug.

Mercer’s Shinn believes that without appropriate controls Viagra could increase prescription costs for health care insurers and employers 3 percent or 4 percent.

Matter of Equity, and Consistency

Within months after Viagra was introduced, almost half of the men taking the drug were receiving at least some reimbursement, while women have struggled for years to get birth control pills covered. Now, almost 40 years after the introduction of the pill, half of all prescriptions are covered, although some health plans charge employers extra for the benefit, according to IMS. Most plans still do not cover other forms of contraception.

Women’s groups and some members of the medical profession have raised objections about the disparity, noting that women spend 68 percent more on health care than men, largely because of reproductive care.

To ignore the health benefits of contraception “is to say that the alternative of 12 to 15 pregnancies during a woman’s lifetime is medically acceptable,” says Luella Klein, director of women’s health issues at the American College of Obstetricians and Gynecologists in Washington, D.C.

The Health Insurance Association of America in Washington, D.C., points out that most insurers offer plans that cover contraception, but employers who pay for health care choose not to buy them.

To prevent that practice, Sen. Olympia J. Snowe, R-Maine, and Rep. Jim Greenwood, R-Pa., introduced a bill last year that would require health insurers that pay for prescription drugs to cover prescription contraceptives. Backers hope the inequity issue highlighted by Viagra will garner public support for the bill. But opponents argue that birth control is optional, whereas impotence is not.

“It’s not in the same category; it’s not an equity issue,” Shinn says. “Viagra is not a fertility agent in and of itself. It increases blood flow, but there is no fertility activity. There are male fertility agents—they would be in same realm.”

If a plan covers Viagra, it should cover birth control, Sinni counters. “It’s a Viagra issue and a much larger issue. Women are saying there’s a double standard, that insurers are offering to treat male lifestyle issues but not ours. It opens a Pandora’s box of other lifestyle-related issues.”

The equity issue also relates to cost. A new drug or treatment as expensive as Viagra could mean that every employee covered by the health plan would have to pay $5 to $8 more per month, Sinni points out, even though not everyone would benefit from the drug.

But that may change in the near future. Studies indicate that Viagra also may help women with sexual dysfunction. The FDA has not approved the use of Viagra for women. If it does, insurers will again have to grapple with the decision of whether to cover the drug.

The best way to resolve equity concerns is to be consistent, advises Ed Kaplan, vice president of national health practice at The Segal Co., a benefits consulting group in New York. He suggests viewing all aspects of sexual reproduction-impotence, infertility and contraception—as a whole.

“If a company that is self-funded is not consistent, it’s taking some risk,” says Kaplan. “You could get into costly lawsuits.”

Kaplan says grouping lifestyle drugs into one category will make it easier to decide how to cover them, especially as new drugs get introduced. “Ask yourself, are you covering lifestyle drugs or not? If you make a radical change [from your policy], logic tells you that you are leaving yourself open” to legal challenges, he says.

According to guidelines Segal gives its clients, the treatment of male impotence falls into the same category as treatment of infertility, breast reconstruction or other health care services that are not medically necessary but are commonly requested by plan participants. If an insurer has paid for impotence treatments in the past, including behavioral health counseling for sexual inadequacy or for expenses related to penile implants, the coverage of Viagra would be consistent, Segal advises.

Louis Marcil, a 77-year-old retiree in California, is hoping the courts agree with that assessment. He is suing Kaiser Permanente for refusing to pay his Viagra prescription bill on the basis that treatment of his impotence, which resulted from prostate cancer, is a medical necessity, and that Kaiser paid for his penile injection-therapy treatments in the past.

Oxford Health Plans Inc. also is being sued over its refusal to cover Viagra. The plaintiffs lawyers are seeking a class-action status, which would include those diagnosed by a doctor or therapist as either physically or psychologically impotent who have been unable to get full coverage for Viagra from their insurers.

There is no reason to deny coverage “other than the fact that insurance companies want to save money and make it more difficult for people to get the drug,” says attorney Steven Cooper, a partner at Anderson Kill & Olick in New York, the lead plaintiffs law firm.

Indeed, lawsuits may become a costly side effect of Viagra for insurers and employers. Some health care consultants worry that employees may claim that denial of Viagra would impair a major life activity and, therefore, violates the Americans with Disabilities Act.

Just the Beginning

The issue of coverage of new drugs like Viagra is not about to fade away. Health care consultants see an explosion of new, expensive medications of all types. Flagstad and Kolling predict 55 to 60 new drugs will be introduced next year; Sinni believes that number may be as high as 200.

Shinn says it may be better to sit back and let the marketplace weed out these drugs. Some of these new specialty drugs “make a noise in the public arena,” but he finds their promises are often exaggerated.

Indeed, for some, Viagra may be all hype and no substance. Studies show its effectiveness to be modest—between 73 percent and 48 percent. Competitors are racing to develop products similar to Viagra that have fewer side effects, work more quickly or have better results. The FDA is already considering an application by Woodlands, Texas-based Zonagen to approve its impotence drug, Vasomax.

How do employers sort through all this? Kaplan says they will have to walk a fine line between keeping employees happy and controlling health care budgets.

“I tell clients who are not paying [for a treatment or drug] that they have to maintain their benefits budget,” says Kaplan. “It’s a hard stance. They have to budget so that everyone can have reasonable access to care.” He suggests being honest with employees, telling them they must pay for lifestyle drugs such as Viagra so that health plans can cover life-saving procedures such as organ transplants.

“We’re getting to the point of rationing care, and the decisions get dumped on employers who are not prepared for them,” he says.

Sinni advises employers to determine where the greatest needs are and to apply resources where they need to be. “Is there a right or wrong answer? Probably not,” he says. “It depends on the employer’s social contract with employees. How much cost do they want them to bear?”

On the other hand, Kolling points out that although covering lifestyle drugs may be costly in the short term, it may pay off in the long run by retaining valuable employees.

Flagstad and Kolling predict that companies will start pressuring insurers to cover Viagra, noting that employers sometimes have different concerns than managed-care providers, which concentrate on short-term costs.

“The benefits manager has to balance it all out,” Kolling says. “Employers are very interested in having employees on the job and out of hospitals. And if it’s a skilled workforce and the people are difficult to hire, retain and replace,” there is even more interest in providing benefits that employees demand.