LARGEST HMO STOPS COVERING IMPOTENCE DRUG

Kaiser Permanente, the nation's largest health maintenance organization,
said Friday it will no longer cover patients' use of Viagra, saying the
impotency pill is costing too much money.

Kaiser's move is considered significant because other HMOs and health plans
across the country are expected to either follow suit or at least crack
down on the pill's widespread use.

Aetna U.S. Healthcare, which has 425,000 customers in the Chicago area,
said earlier this week it is continuing to review Viagra and has no plans
to cover it in the near future.

Blue Cross and Blue Shield of Illinois, the state's largest health insurer,
completed its own review Friday and plans to soon begin auditing the drug's
use by men under the age of 50.

"We are looking really hard for males under 50 to see what clinics they
come from," said Dr. Allan Korn, chief medical officer of Blue Cross and
Blue Shield of Illinois. "This (Viagra) has really created an
administrative heartache for us . . . (but) we have fiduciary
responsibilities to people who pay us premiums to monitor the situation."

Questions about the usage of Pfizer Inc.'s Viagra have raised a national
debate among insurers, physicians and medical ethicists about the medical
necessity of Viagra, which came on the market in April.

When the U.S. Food and Drug Administration approved the drug, it was to
treat impotence and "erectile dysfunction." But health plans say some
physicians have made their own interpretations and prescribed it more
liberally.

Medical ethicists said it's up to physicians and insurers to decide what is
medically necessary before ending coverage for all customers. The drug
continues to be hailed as remarkable for men who have had prostate surgery
or spinal cord injuries or are impotent.

"It raises the question of what counts as a disease," said Philip Boyle, a
medical ethicist who is senior vice president of the Chicago-based Park
Ridge Center for the Study of Health, Faith and Ethics. "Are all of the
people seeking (Viagra) really suffering from some illness or disease? I
would say surely not."

Oakland, Calif.-based Kaiser, which has more than 9 million people enrolled
in its not-for-profit plans, said it will exclude coverage of the pill and
other drugs for sexual dysfunction as it renews benefits contracts. It will
allow its largest customers to buy supplemental policies that would include
coverage of such drugs.

Kaiser said limiting patients' use to 10 pills a month would cost more than
$100 million a year, or more than 50 percent above what the HMO spent in
1997 for all of its anti-viral drugs.

In Illinois, most plans covering Viagra limit patients to eight pills a month.

United HealthCare Corp. said it has safeguards within its HMO to prevent
patients from abusing the drug, but the company will review Viagra in the
next 10 days.

"We regulate how many pills a member can get filled under a prescription to
eight a month to prevent stockpiling," said Dr. Kaveh Safavi, vice
president of medical affairs for United HealthCare in Illinois. "The
prescription has to be written by the physician treating the erectile
dysfunction. If we got information from that physician that there was abuse
we would reserve the right to (end coverage)."

United's proposed $5.5 billion acquisition of Humana Inc. soon will give
the Minneapolis-based HMO more than 760,000 customers in Illinois.

Wall Street will be carefully watching the second-quarter profits of HMOs
like United when their earnings are reported in the next few weeks, said
Peter Costa, an analyst with the investment banking firm ABN AMRO.

"Everybody's now reviewing Viagra, and they may pull the plug," Costa said.

Blue Cross and Blue Shield of Illinois, a not-for-profit insurer, said it
wanted to wait about three months before deciding whether to crack down on
Viagra's use by its customers. Thus far, use of the drug hasn't been a
problem.

Fewer than 600 prescriptions have been written for men under 40 in Illinois
Blues plans, costing about $960 per patient.

"Our statistics show a high degree of responsibility and we are proud of
the Illinois physician community for that," Korn said. "Clearly people
aren't going in and demanding 50 pills."

If there is abuse, the Illinois Blues are suspecting younger men.

"If they are paying a $1,500 annual health insurance premium to have good
sex, it just doesn't compute," Korn said.

As private insurers struggle with coverage issues, the Clinton
administration has said it may require state Medicaid programs to cover the
drug.

In Illinois, Viagra use by Medicaid recipients hasn't been a problem. Only
one person has requested Viagra under the state's health insurance program
for the poor, and that request is pending.

Physicians in Illinois must get prior authorization from the Illinois
Department of Public Aid before prescribing Viagra.

"We want to tightly gauge the use of Viagra," public aid spokesman Dean
Schott said.

Abuse of Viagra in Illinois isn't likely to be a problem, Schott said. Of
the state's 1.4 million Medicaid recipients, only about 150,000 are men
over the age of 18. Widespread use isn't anticipated.

Checked-by: Richard Lake