The Pew Charitable Trusts

The days of taxpayer-funded Viagra for poor Medicaid recipients could be numbered.

A recent report that 14 states' Medicaid programs provided the impotence drug to convicted sex offenders whipped up a national uproar and has spurred at least seven states to consider cutting off Viagra and similar medications for all those on Medicaid.

The controversy comes amid national debate over Medicaid reform, with some officials pointing at reimbursements for Viagra as just the latest example of how federal and state dollars could be better spent.

Although spending on Viagra and similar drugs accounted for a fraction of 1 percent of total Medicaid spending in the past year, the program's advocates worry that the scandal could sully Medicaid as Congress this summer considers a five-year, $10 billion cut to the state-federal program for poor and disabled Americans.

The federal government last month informed states that they must halt Viagra payments for all sexual offenders. But New York, Florida and Texas have gone even further and temporarily banned Medicaid reimbursements for Viagra for everyone, and Georgia, Louisiana, South Carolina and Virginia are proposing to take Viagra off the list of Medicaid-covered drugs.

In New York, where an internal audit first revealed May 22 that 198 of the state's most dangerous sexual predators received taxpayer-funded Viagra through the state's Medicaid program, Gov. George Pataki (R) temporarily has halted all payments for the drug until the state Legislature enacts measures to exclude sex offenders.

>The New York audit prompted other investigations, including a May 28 report from The Associated Press that nearly 800 convicted sex offenders in 14 states were reimbursed through Medicaid for Viagra, Cialis and Levitra, the three drugs the U.S. Food and Drug Administration has approved to treat erectile dysfunction in men.

Florida and Texas, which along with New York accounted for the vast majority of cases, quickly moved to halt payments for erectile dysfunction medications for all Medicaid recipients. In Texas, at least two convicted sex offenders who committed new sex crimes after they were prescribed the medication are among the 3,800 Medicaid recipients affected by the Viagra reimbursement ban. In Florida, the attorney general's office estimated that among registered sex offenders who received Viagra through Medicaid over the past four years, 77 percent had been convicted of sex crimes involving minors, a sensitive topic in the Sunshine State after several recent high-profile murders involving children.

Virginia Gov. Mark Warner (D), chairman of the National Governors Association, issued an emergency order halting reimbursements for the 52 registered sex offenders in his state who were receiving Viagra and instructed state health officials to investigate whether to ban any Medicaid payments for the erectile dysfunction drugs, regardless of a patient's criminal history.

Georgia Gov. Sonny Perdue (R) called earlier this month for a stop to all Medicaid reimbursements for impotence drugs after the state's Department of Community Health reported that a quarter of a million dollars have been spent on the drugs in the past year. Georgia stopped payments for the five registered sex offenders who were receiving the medicine.

Efforts to end all Medicaid payments for impotence drugs also are under way in Louisiana and South Carolina, neither of which is among the 14 states that provided the drugs to sex offenders, according to The Associated Press.

When Viagra first came on the market in 1998, governors vehemently protested a federal requirement that states' Medicaid programs subsidize the drug. Although it's technically optional for states to provide prescription drug coverage through Medicaid, all states do, and once a state chooses to provide drug coverage, it is -- with a few specific exceptions -- obligated to cover all FDA-approved medications.

Matt Salo, who handles health care issues for the National Governors Association (NGA), said there has been a strong consensus among states since 1998 that there are better uses for Medicaid money than funding impotence drugs. "We're struggling to find money to keep frail seniors alive in nursing homes," Salo said.

But states have been operating under federal guidance they received in a July 1998 letter from the Nancy DePearle, then the U.S. Department of Health and Human Service's health care financing administrator. The letter informed governors that states couldn't exclude Viagra from their Medicaid programs but granted states broad latitude to determine the circumstances under which the drug would be dispensed.

Subsequently, state policy on reimbursements for drugs to treat erectile dysfunction varies, but all states until now provided some sort of coverage.

After the New York audit, HHS'Centers for Medicare and Medicaid Services issued new advice that clearly lays out states' responsibility to prevent sex offenders from receiving Viagra and similar drugs. The letter threatens states with sanctions if they provide Medicaid reimbursements to sex offenders for impotence drugs, but does not explicitly state whether states are allowed to curtail coverage for others.

The May 23, 2005, letter to state Medicaid directors from Dennis Smith, director of the Centers for Medicare and Medicaid Services, said that "states are obligated to prevent fraud, abuse, gross overuse, or inappropriate or medically unnecessary care."

"There apparently was some confusion among states that they had to cover Viagra no matter what -- even for a sex offender," said Gary Karr, a spokesman for the federal agency.

U.S. Sen. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, introduced legislation in late May that could clear up the matter. Grassley's bill would rewrite federal law explicitly to prevent Medicaid and Medicare dollars from paying for erectile dysfunction drugs for anyone. That could save Medicaid $2 billion over 10 years, one-fifth of the amount Congress is looking to cut, according to Salo of NGA.

Salo said that NGA has not officially endorsed Grassley's proposal but that "the freedom to not cover drugs like Viagra is clearly a flexibility that could save states and the feds money without harming beneficiary access to needed medical care, all of which are key components to any successful Medicaid reform package."

Advocates for the poor worry that the flap over taxpayer-funded Viagra for sex offenders will set the stage for deeper Medicaid cuts for needy Americans.

"This is just another well-orchestrated stroke towards the overall goal of discrediting the Medicaid program so that when they're trying to gut it later in the year, they won't seem so cruel," said Steve Hitov, an attorney with the National Health Law Program, which provides legal assistance to low-income people.

Anti-tax groups, meanwhile, say the controversy points to a lack of proper oversight in the giant Medicaid program, which is expected to spend $330 billion in 2005 to provide health care for 53 million low-income and disabled Americans."People are not watching the pennies and the dollars carefully, or this sort of thing would have been caught a long time age and wouldn't have happened," said Grover Norquist, president of Americans for Tax Reform.