Public Purse a Cash Cow for Pharma: Could Taxpayer Dollars Be Better Spent?


A few years ago when I was directing a Medicaid mental health managed care organization, the irascible senator from Iowa, Chuck Grassley, got a burr under his saddle, as they say in the Midwest, about what the federal government was paying out for psychiatric medications in Medicaid expenditures. And he was able to connect the cost information to individual prescribers.

The two highest prescribing billers were in my area in Oregon. I was shocked for several reasons.

The first was that I had no idea what these figures were because they weren’t in my Medicaid budget. The second was that the highest prescriber was in my area. In one year alone, he had billed $457,000 of psychiatric medications, mostly Abilify. The third—and this was an extremely dismaying shocker—was that he was a child psychiatrist, and so he had been prescribing Abilify and these other drugs to children and adolescents.

I called him up and, in the most polite terms I could manage, asked him what in the hell he was doing. He had become a disciple of Dr. Joseph Biederman at Harvard, who had been spinning a story about how children as young as two years old could be diagnosed with bipolar disease. A good example, possibly, of a local doctor who thought he was doing the right thing.

I didn’t have direct control over him because the funding was excluded from my budget. I did call the program director and asked him what he thought about what this psychiatrist was doing. He told me it was none of my business. And I told him that it certainly was my business because I had a contract with him and the state Medicaid office to see that his program provided quality of care. (A quick lesson here for bureaucrats and advocates: If you start poking around on psychiatric medications, you will get into sensitive spots.)

Soon after, Oregon made a decision to end all of these mental health managed care organizations in favor of their much-touted Coordinated Care Organizations, and as a result, I didn’t have a chance to follow through. But I never forgot that figure and I realized there must have been that reason these Medicaid expenditures were not in my budget. So I did some investigating and learned why: the pharmaceutical lobbyists had done a great job of keeping control of them out of the hands and control of anyone who might try to manage that part of their mental health budget. In Oregon, it’s called “the 7-11 exclusion” of psychiatric medications.

In other words, these expenditures were hidden from the directors of the managed care organizations—the very people that might question such expenditures.

Fast forward to a few months ago when one of the great advocates in Oregon, Kevin Fitts, and I came up with a strategy to update what Sen. Grassley had done several years ago. Kevin made a public information request to the state’s Medicaid office for information on Medicaid spending for psychiatric drugs.

Much to our pleasant surprise, they provided us with the figure. In tiny Oregon, which has only about 1% of the national population, medical expenditures for psychiatric drugs in fiscal year 2017-2018 were $82.2 million for adults, and another $8.7 million for youth 18 and below.

Bear in mind, as we try to figure out spending in Oregon on psychiatric drugs, that this figure does not include medication expenditures for the state hospital (which are state funds, e.g. not Medicaid). My guess is that it will turn out to be about $10 million. The Medicaid number also doesn’t include Medicare or spending by private insurance. Be asking for those figures too. Finally, if we want to tally a state total, we will need to find out the costs of all the psychiatric drugs that are being prescribed in adult and juvenile correctional settings—prisons, jails, juvenile facilities, and other institutional settings.

One additional cost with the prescribing of psychiatric drugs is the easily overlooked factor of the costs of MDs and other prescribers doing “medication management.” This is not a small budget item.

As a way of putting this spending into perspective, my annual budget (admittedly 10 years ago) for all behavioral health services, community as well as state hospital, was about $500 million. Yet, that didn’t include the cost of Medicaid psych drugs ($90 million), or the state’s cost for medications at the state hospital ($10 million). So my best guess is that 20% or more of the state’s annual spending on psychiatric services is for psychiatric drugs, and I think it may turn out to be closer to 30% once we have all the numbers.

What does all this mean in terms of policy? The first thing is that very few policy or program directors probably have any idea how big these numbers are. I think every advocate in the US should request the figures from their state Medicaid offices.

In lieu of that, we can multiply Oregon’s by 100, which means we should be looking at total public expenditures of at least $10 billion for Medicaid payments for psychiatric drugs, and probably more than that.

The next policy implications are that the pharmaceutical corporations must be exposed for what they’re doing to keep these figures hidden. Fiscal conservatives in state legislatures, if they are being true to their cause of efficiency in state government, should also be called to task. That will be a huge challenge.

Finally, once this cost information is known, there are state, regional and local policy changes that are necessary, which would take into account whether this high amount of spending on psychiatric drugs is warranted.

None of this will be simple or quick.

My goal in writing this blog is to get these budget, policy and clinical program issues out into the open for us as “the choir.” And then we need to enlist a lot more people in advocating for a critical review of these expenditures.

At least now, with even this preliminary look at drug expenditures in Oregon, we have a better idea of the high cost of state spending for psychiatric drugs. We can begin to think about how, if we reduced the spending on such medications, we could then put the money to better use for improving mental health care.


Mad in America hosts blogs by a diverse group of writers. These posts are designed to serve as a public forum for a discussion—broadly speaking—of psychiatry and its treatments. The opinions expressed are the writers’ own.


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  1. Bob
    Thanks for this info. I am working to reform our care in my city and will certain want to get that our local expenses from medicaid. I had sent an email to Miranda regarding this and if you have time to email me directly I can give you the details. In a nutshell I want to establish a Hearing Voices Network here, in addition I would like to establish a drug free or not mandatory crisis center and even a Soteria like house.

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  2. “We can begin to think about how, if we reduced the spending on such medications, we could then put the money to better use for improving mental health care.” True, but reducing the spending on the psych drugs will also likely decrease the amount of money needed for “mental health care,” given the iatrogenic damage caused by the psych drugs. Which would be a wonderful thing for all, except the “mental health” workers.

    But I agree, thank you for doing this research, and pointing out how the pharmaceutical corporations have systemically covered up this information, from those who need this information to make cost/benefit analysis decisions. “If the American people ever allow private banks to control the issue of their money … the banks and corporations that will grow up around them ….” Shame on those “corporations.”

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  3. Yeah, a guy ran for office on using laws to involuntarily drug the ~mentally ill~.

    A lot of people are really committed to drugging. I know people who believe that they have to have it. Guy who says his drugs are the only thing which keep him socially functional. And says, “But I want to enjoy my life.”

    And then same with Psychotherapy, lots of people believe that they have to have it, speaking of Survivors, “Because I have no center”.

    Most of all it exonerates abusers, and it is because they believe that non-violence as a way of life is morally superior to standing up for themselves.

    Many of these people are also using street drugs. And on this forum, people have advocated street drugs over prescription drugs because the drugs “heal”.

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  4. Here is psychiatric expenses in France in 2016 (euros):

    disorder: Number of persons, total expenditure, expenses per person
    Psychotic disorders: 417300, 4976000000, 11924
    Mood and neurotic disorders: 1256600, 6229000000, 4957
    Mental impairment: 125900, 666000000, 5290
    Addictive disorders: 292900, 1361000000, 4647
    Psychiatric disorders beginning in childhood: 128800, 1277000000, 9915
    Other psychiatric disorders: 389800, 1796000000, 4607


    This represents 4% of the population and 10% of health expenditures.

    However, this includes only people with a “long-term condition”, consumers of psychiatric treatments are 5-6 times more numerous.

    It does not include non-medical expenses such as housing and disability pensions.

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  5. It’s better to just throw money away than spend it on psychiatric medications.
    By the way – Ukraine is now at war with Russia, and Russia sends so-called humanitarian convoys to occupied territories of Ukraine with antipsychotics and other things (in white trucks), as in the Coca Cola advertising. I get this “medicine” in the hospital and it says “Humanitarian Aid from Russia”. Isn’t it simple and honest? As if revolution and psychosis have the same roots?

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  6. Congratulations on your work to follow where the money goes .

    I hope you are aware of the trap seriously mentally ill persons are in. If they are not taking psychiatric medications then they are not following medical advice and can be forcefully medicated, or if they are not taking medication it means they are well and will no longer receive Government money to have food and shelter.

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    • Mark, my experience as a person who ended disability payments, I can tell you it’s very hard to get them to end the payments. You can’t just tell them to stop. They won’t. They put me through insane hoops and now, finally, they figured it out, and I have to pay back to them what I did not even want.

      They literally want you to stay disabled.

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  7. Very good on finding those hints Robert Nikkel. In Case don’t know there was a man, Dr. McLaren, wrote article in 2017 actually titled Mainstream Western Psychiatry Science or Psuedo Science.

    Essentially though he says the amount of people that access medications has gone up as a huge mountain very very quickly since he graduated medical school and started practicing. The sharp rise is the relevant point. Appreciate this article and the liberty it enhances pointing to business practices. It’s a shame to look at getting help that way though.

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  8. $90,000,000 is just the tip of the iceberg. The MIS is geared to keep people messed up so they never function as adult human beings. Those places are run on tax dollars.

    And thanks to segregating psychiatric labels plus all the “safe and effective” damage they endure, the human beings used as lab rats are forced to live on tax payer expense. With government run housing or institutions due to the housing shortage. And since they’re forced out of the workplace there are fewer tax dollars going in as well.

    For all the goods and services paid by taxes my guess is the psychiatric bill could easily top $1,000,000,000 in one year. Abolishing psychiatry would be a boon to the economy.

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  9. The way to improve mental health care is most likely to dismantle it and be done with it. I once read a report that dealt with how a psychiatric hospital that was closing helped their long-term patients adjust to moving into the real world. They began preparing well ahead of the planned closing date and were able to move almost all of their people out of their system and into the real world without much upheaval to the people involved. It wasn’t fun and it was hard work but they were able to responsibly integrate people back into life. It wasn’t totally successful but there was a high rate of success, even over time. The same needs to be done with the mental health system; slowly but surely teaching people how to stand on their own two feet as much as possible and moving out into the community so that the system can be shut down. Period.

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        • Much as I’d like to see this happen tomorrow I believe that we can’t just shut it down all of a sudden. There are too many people locked up inside of too many institutions across this country and we owe them the help they will need to make the transition so that the damned system can be closed once and for all. In Western Finland where Open Dialogue originated they were able to clear most of their “patients” out of their institutions but there are a few people who were incarcerated for so long that they don’t know the outside world at all. They allow these “patients” to remain in the only home that many of them have ever had.

          I have “patients” where I work who’ve been held there for thirty years and they know nothing really about how to get along in the world beyond the walls that we hold them behind. Setting them free, if they ever do get to be free, will have to be a very well-coordinated process whereby they are prepared well ahead of time about what to expect and how to go about living “out there”. Some of them that I work with who’ve been here for most of their adult lives and who are approaching freedom are absolutely scared to death of the day they will be marched out the door from Admissions. My fear is that none of this preparation will be given them. We’ll just turn them over to some RCF and say, “Take care of them” and that will be that. This kind of stuff is hard and long drawn out work and very few people want to do it. But we can’t just throw people out of the institutions where they’ve lived and say “Good-by and good luck!” That’s what Reagan did in the 80’s and look at how well that worked. I hope that when the time comes where we have enough strength and power to close the system down that we won’t repeat history.

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          • It’s the same with any prison system, Stephen. They don’t prepare the inmates at all. One week of workshop of some sort but it’s never enough. Times change. My friends who were on the inside said that they would have appreciated some very simple how-tos. In a decade, finding a rental has changed drastically. Technology has changed. They do background checks for housing and employment worse than ever now, but I think that is going to change.

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  10. Robert Nikkel, If I were to write to my state legislators, how would I ask for this information, and whom would I contact to get it? I know I would have to word my request carefully. If I could get these figures I could then send them to key legislators who may be very concerned about where tax money is going.

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    • You would think that the Freedom Caucus, what I think was the original Tea Party in Congress, would be very interested in things like this but they don’t seem to be. They just accept whatever bull feces that the drug lobbyists and the psychiatrists tell them. But I’ve noticed that their concern for fiscal problems is very selective these days.

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  11. Where would “mental illness” be without all the people who profit from it? I think that’s a primary concern. We’re dealing, not with a business, but with multiple businesses, all in cahoots. “Health” is almost a peripheral issue. What the matter is all about is keeping all these people who “serve” the people perceived as “needy” or “suffering” in bread and butter. Prevention efforts are corrupted by all the people who profit from “ill” health. Given the sort of treatments people receive, extended artificial disability leads directly to permanent physical disability, and permanent disability keeps some of these people going. I don’t see the money doing a lot of good unless it is directed towards getting people out of the system (i.e. what they used to call “mentally healthy”). There is absolutely no way to decrease “patient” numbers without downsizing, and that means getting rid of a lot of the people towards the upper end of the pyramid, that is, getting rid of some of the people who profit the most from this sort of thing.

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    • Frank, your comment brings to mind a situation that I was recently in. Over the past year-and-a-half I was trying to go to an IOP program that has dialectical behavior therapy. I’ve been in the program before and I wanted to go back, and had an offer from the clinician who runs the program, to come back because they now have added a trauma component to the program. I never had trauma therapy before and I wanted to try it as it was pretty much the only thing I haven’t tried, and I trust this clinician, or did trust him. So I was sort of straddling the fence between giving up on getting any help thru the system and giving it one more go. Long story short, as I was trying to get into the program and they kept setting up barriers for me, like that I would have to also have an individual – outside – therapist (yeah I’m such a tough case that I would have needed this whole architecture of support. Actually all I ever needed was one decent therapist but that didn’t happen) blah blah, I finally couldn’t take it anymore. I felt lied to about a lot of things that went on in prior treatments. I felt supremely patronized by some of the people I was in contact with.

      One of the barriers was, I take something called kratom which is a plant that grows in Thailand. The FDA has been trying to ban it in this country for the past 3 years or so, and I mean really really trying to ban it. They have launched a whole campaign and got the DEA involved in an emergency scheduling which is ridiculous because Kratom is really pretty safe. It has opiate like properties yes but it’s impossible to overdose on kratom and it doesn’t have the same kick as a real opiate.

      The medical doctor in this program told me I would have to go into a detox to come off the kratom before I could come back to the program. The thing that really bothered me was that they would have been fine with me being on Suboxone or methadone, as long as I was getting it from a doctor. I think they didn’t like the fact that I’m circumventing big pharma, circumventing doctors… that no one is monitoring it for me because certainly I can’t be trusted to monitor my own consumption of a legal plant (well, still legal in my state thank God. The FDA has made some inroads.)

      As I tried to explain to them many times, I have severe fibromyalgia, arthritis, I badly fractured an ankle a year ago and I’m still healing from that. I don’t want to be on methadone or Suboxone or Lyrica or any of that crap. I tried to explain all this and of course I was talking to a wall. So that was one of the last straws for me.

      But when you talk about the multiple businesses and entities that profit from the system being what it is…to me the kratom situation was a perfect example of that. As I blurted out at one point when I got fed up with what these doctors were saying, “everyone knows the FDA works for big pharma so of course they don’t like kratom.” Also, who caused the opiate epidemic? If you ask me, doctors and big pharma. They’ve got people dying on the street of fentanyl overdoses but yeah the da needs to rush in and schedule kratom.

      So the whole thing was kind of ridiculous, turns out I’m not getting trauma therapy but at least I don’t have to be a mental patient anymore.

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        • KateL, your experience resonates with me. In my opinion, the MH system does not offer anything of value, not from mainstream MH, anyway. When it comes to trauma you might find value in one of those “kooky” therapists that is totally outside-the-box.

          I found value in a tapping therapist who understood totally that I had been abused in a hospital. Most therapists did not understand and assumed I was paranoid. Of course there’s no sense even trying to reason with them. Just move on.

          I would not even bother telling them about the kratom. Just keep it to yourself. I also broke my ankle, three weeks ago. Not badly, though. It is healed but I also sprained my foot and that is taking longer to heal.

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          • Thanks, Julie. I shouldn’t have told them about the kratom, that’s for sure. I was operating under an honesty is the best policy sort of rule but that doesn’t work with these people. And once I had told them I would have had to lie and tell them that I’d stopped taking it and I wasn’t about to do that just to get back into this program. it was probably for the best anyway because then I would have been back in that IOP and there would have been so many other things that we would have locked horns about, like all the coerced drugging that goes on.
            I’ve come to think that DBT is kind of a ridiculous treatment anyway because it’s based on the idea that the past doesn’t matter, the trauma doesn’t matter. They’ll tell you it doesn’t matter how you got this way just learn these coping skills and you’ll be fine. In my case that couldn’t have been farther from the truth. They only finally just added this trauma component to the treatment. They didn’t have that 10 years ago when I first one up in the program. Just DBT, no trauma therapy. Well DBT and drugging.

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          • KateL, I tried DBT and found it silly and irrelevant. It didn’t help at all, whatever the heck “help” meant. In my case, the one thing I wanted was to stop the abuse and prevent it from happening to others. This, to me, is common sense. Why on earth should I sit and hold a frozen orange when everything in my being tells me I need to stop this from happening? If I don’t speak out…who will? Apparently people are so brainwashed they think if psych abuse happens it’s THEIR disorder. No it isn’t. Coping within, to me, means I have a voice and you bet I’m going to use it. I think meditating my life away would be a huge waste of time. Some do find value in the “here and now” mentality. It’s just not for me and it’s not the universal cure-all.

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          • The frozen orange is used heavily in mindfulness training for those who are prone to dissociate in order to force people to stay in the present. Holding a frozen orange is painful and frankly it’s a perverse form of torture. They also make great weapons when the orange holder realizes the BS they’re being dragged through in the name of “treatment”…

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          • Yes, KS, it actually does hurt. If I hold onto anything that cold I get blisters. I never used the technique myself because it’s idiotic and a waste, but I saw it used on other patients. The pt would ask for something like Klonopin and if the nurses had run out of pill ideas they’d just say, “How about a frozen orange?”

            Now one time I was talking to the nurses about human rights and they tried to hand me an orange. I told them this was a way to silence and discredit me. Along with the frozen orange was the command to “go into your room and be quiet so it’ll work.” It’s a total myth that pills work better if you’re in your room, total bullshit about the orange also.

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  12. Steve, one of the main teachings in DBT is the idea of “getting through a crisis without making it worse”. So for people who have what they call ineffective coping skills, like drug use, self harm, fighting, being an annoying mental patient, anything like that… The idea is that if you get emotionally dysregulated instead of doing your so-called problem behavior you can hold onto a frozen orange or as I was taught stick your face in a bowl of ice water. because as long as you’re holding onto a frozen orange or sticking your face in ice water, you’re not doing the problem behavior. And the idea is that your dysregulated emotions will subside and then you can I guess let go of the orange and take your face out of the bowl and be normal. Something like that.

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    • Wow. That’s some seriously strained thinking! I can think of a hell of a lot of better “substitute behaviors” over holding a frozen orange! Why not talk to the actual client him/herself about what they would choose as a substitute? What, too empowering? Don’t want to encourage people to think for themselves?

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      • It is the rare staff person who actually sits down and talks with a person on the units where I work. It’s so unusual that everyone stops to look at what’s happening when it does take place. Most of the staff are not genuinely interested in what people on the units think about anything. This is the huge problem and is one of the reasons that no real treatment ever happens for people. They’re never asked about anything; they’re just supposed to follow orders and do what they’re told. If they don’t they get point freezes and their band level dropped, and then they can’t participate in anything that they might enjoy. It’s so totally frustrating to me that I want to scream when I leave the units; I just want to stand out in the main hallway and scream at the top of my lungs but then I’d end up in one of the beds on one of the units since I am a former “patient” after all. When staff ask me what my job is I tell them that my job is to listen and to actually hear what people are saying, and to respond in ways that let the people know that I’ve actually heard them. They act very dismissive as if this had absolutely no value at all concerning what is going on in the “hospital”.

        I know that you were being sarcastic but you are absolutely right when you point out that the system does not want people to think for themselves and they certainly don’t want them to become empowered. They fear these two things worse than just about anything else and will do just about anything to keep it from happening. And if people don’t conform and comply they get drugged to the gills till they drool on themselves. And this is why they should remove the word “recovery” from every mission statement in all of these institutions because what they do negates any kind of recovery and keeps people helpless and childish.

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  13. I did find DBT helpful at times but it wasn’t worth it. I was still a mental patient and everything that came with that, like being told that I needed to be on antipsychotics because of my inappropriate anger.

    To circle back to the topic of the article, which I appreciated (wow, the $$$) I have an abilify story from the time when I was in the DBT program at the IOP. I met with the medical doctor and she was renewing my amphetamine prescription. I had made sort of a devil’s bargain with her where she would give me amphetamines and I would take an anti-psychotic. She was about to write the abilify prescription and asked me, “what dose works best for you? I can do 5:10 or 15 mg.”
    I told her I didn’t notice any difference one way or another being on or off for abilify or on a higher or lower dose of abilify.
    She answered, “I’ve seen you off abilify. I’m prescribing 15 mg.”
    In my head I was like, why did you even ask me?

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