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Medicare to cover Viagra
Drugs treating erectile disfunction will be covered under new Medicare plan for next year.
February 1, 2005: 2:37 PM EST
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - Medicare beneficiaries will be able to receive drugs treating erectile disfunction, including Viagra, Cialis and Levitra, as part of their coverage next year, so long as their prescriptions are deemed necessary on a case-by-case basis, according to a Medicare spokesman.

"As long as the drug that is being prescribed is medically necessary, the plan will cover this drug," said Medicare spokesman Peter Ashkenaz.

The new coverage will take place when the Medicare Modernization Act, passed by Congress in 2003, is implemented in 2006, said Ashkenaz. Ashkenaz said that Medicare has never before covered any drugs except some of those administered by physicians in doctors' offices, such as inhalation therapy drugs and pharmaceuticals treating cancer. The new plan will cover a broad range of pharmaceuticals, not just those treating erectile disfunction.

However, this may not boost the market for drugs treating erectile disfunction.

Even when access is streamlined for individual consumers, the overall market for erectile disfunction treatment is not likely to see much growth, if any, because it is already peaked, according to Winton Gibbons, pharmaceutical industry analyst for William Blair & Co.

"There's been all this focus on the market, and it just hasn't gone anywhere," said Gibbons, who owns 1,200 shares of Pfizer. "The market just isn't growing. I think it's stagnant."

Gibbons said the worldwide market for drugs treating erectile disfunction peaked at $2.5 billion last year, and that heavy advertising and free samples are unlikely to increase sales.

Nonetheless, Dan Watts, spokesman for Viagra maker Pfizer Inc., (down $0.18 to $23.98, Research) praised the news.

"We're just pleased that it's going to be part of Medicare," said Watts. Watts said he was glad that erectile disfunction has been recognized as a condition, and that "men who have the condition will be able to receive treatment."

Pfizer reported a 71 percent worldwide market share with Viagra, which generated fourth-quarter revenues of $248 million, a 14 percent jump from the third quarter.

Including the drug in Medicare coverage would cut costs to individual patients and make it easier for them to pay for their treatment.

"It's going to push some people who are at the margins of being able to afford it into the consumer category," said Michael Franc, vice president of the Heritage Foundation, a public policy think tank based in Washington.

Not everyone believes Viagra to be medically necessary. Rep. Gil Gutknecht, R-Minn., who opposes the Medicare Modernization Act, in a statement he said, "If we are going to be paying for Viagra now, sooner or later we will be paying for other recreational drugs. This only reinforces my belief that this will be far more expensive than any of the projections we saw before passage. Congress should revisit this before the genie is completely out of the bottle."

Kindra Strupp, spokeswoman for Eli Lilly & Co (up $0.40 to $54.64, Research)., manufacturer of Cialis, said she was pleased that Medicare recognized "that men deserve access to medication in the class that Cialis belongs." Strupp said that erectile disfunction serves as an early warning sign for underlying medical conditions like diabetes and heart disease.

A phone message to Bayer AG (up $0.43 to $34.25, Research), which manufactures Levitra with GlaxoSmithKline (unchanged at $0.00, Research), was not immediately returned.  Top of page

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