One of the major questions in developing a new cocaine medication is whether there will be sufficient and reliable payment for the medication. Payment for substance abuse treatment, including for cocaine abuse, remains heavily dependent upon government sources. Government provided almost 80 percent of the financing for substance abuse treatment in 1992 (Harwood et al., 1994). This represents only a modest shift to private sector sources since the 1982 NDATUS, which estimated that private sources (insurance plus out-of-pocket) accounted for about 6.5 percent of payments for specialty provider substance abuse treatment (Rice et al., 1990).
The limited sources with reliable data about payment sources in the substance abuse population suggest that only a fraction of patients seeking care for substance abuse treatment have either private insurance or sufficient earning capacity to reasonably afford a medication that would be taken for an extended period of time (e.g., several months or more). According to 1995 TEDS data (Figure 11 below), more than two-thirds of all enrolled cocaine abusers had no health coverage, and another 17.6 percent had Medicaid coverage. Only 9.1 percent of enrolled cocaine abusers had coverage through private insurance (e.g., Blue Cross/Blue Shield, HMO). Wages or salaries were the primary source of income for only 28.1 percent of enrolled cocaine abusers, while 51.9 percent were either on public assistance or had no income. More than three-fourths of the enrolled cocaine abusers were either unemployed or not in the labor force, and nearly 40 percent had not graduated from high school.
|Indicators of Ability to Pay for Treatment|
|Expected Source of Payment|
|Type of Health Insurance|
|Primary Source of Income|
|Not in Labor Force||40.5||42.8||53.7|
|Not in Labor Force|
|Less than HS Grad||36.6||38.1||39.2|
|HS Grad (or GED)||42.9||41.6||42.7|
|Source: TEDS, Office of Applied Studies, 1997.|
The Drug Abuse Services Research Survey (DSRS, Brandeis University, 1993) produced similar findings to those of the TEDS data and are arranged by site of care (Figure 12 below).
|Primary Payment Source (Phase I)|
|Private Health Insurance||44.3||10.2||15.2|
|Employed (Phase I)||47.2||19.1||51.6|
|Educational Attainment (Phase II)|
|Less than High School||33.4||37.7||44.6|
|High School Graduate||26.4||36.1||28.4|
|Beyond High School||25.2||19.5||22.8|
|45 + years||11.3||4.2||3.8|
|Source: DSRS, Brandeis University, 1993a, 1993b.|
Thus, the source and magnitude of funding for cocaine are key variables to consider in our market analysis. Payment for a new pharmacotherapy may come out of the $2.1 billion now being spent, from additional funds that could be made available, or from funds derived from a combination of existing and new sources.
The potential impact of the cost of a new medication for cocaine abuse may be perceived relative to the current cost of care. The wholesale price of certain commonly used psychotropic medications currently fall in the range of $2 to $4 per daily dose. If the wholesale price of a new cocaine medication is in that range, then its retail cost to payers would represent a large increase relative to current payments for cocaine treatment, particularly the average daily per-patient payment ($9.00) for the majority of cocaine patients in outpatient care (Figure 13 below). As for any health care intervention, the cost of a new cocaine pharmacotherapy should be considered in light of development costs as well as any health and economic benefits that may accrue from its use.
|Methadone||Opiate addiction||50 mg||$0.50|
|LAAM||Opiate addiction||80 mg/2 days equal to 40 mg/day||$4.00/2 days equal to $2.00/day|
|Naltrexone||Opiate addiction, alcoholism||50 mg||$4.50|
|Fluoxetine (Prozac)||Antidepressant||40 mg||$4.50|
|Chlorpromazine (Thorazine)||Antipsychotic||600 mg||$3.00|
Source: 1996 Drug Topics Red Book. Medical Economics, Montvale, NJ, 1996.