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of itself, cannot be considered rehabilitation. However, by
reducing the physiological craving for heroin and the fear
of withdrawal, the methadone maintained client is able to
focus attention on work, family and rehabilitative activi-

ties. 125

Methadone Maintenance is a controversial treatment modality. While most methadone programs include medical supervision, care and counseling, and 100,000 heroin addicts had received treatment at over 650 programs nationwide by 1988, many programs are not effectively treating heroin addiction. A substantial percentage of patients continue to use heroin after six months of treatment. This is partly due to the diverse program characteristics set by the programs themselves which have differing policies, goals and practices, and the lack of program oversight by the Food and Drug Administration. 1 26 While hearing testimony outlined these limitations of methadone use, it was pointed out that for many, methadone allows heroin users the opportunity to receive treatment and lead a “normal” life, functioning in both the home and work environments.

As a result of strong opposition presented in public commentary and at public hearings, the Federal Government withdrew a proposal for methadone programs which would give heroin addicts easier access to the drug while waiting for an opening in a comprehensive treatment program. Currently only one drug abuse treatment clinic operated by Beth Israel Hospital in New York City is being operated under a waiver to allow for the provision of an interim clinic to dispense methadone on an outpatient basis. 127 The withdrawn proposal would have eliminated the waiver. Still, the Methadone Maintenance utilization rate is 89.3 percent, 128 and according to Secretary Louis Sullivan, methadone programs were "not ideal . . . but this, we feel is better than nothing for those individuals." 129 Inner city poor and communities of color substance abusers are utilizing Methadone Maintenance at a higher rate than any other modality at 28.7 percent for African Americans and 29.5 percent for Hispanics. 130

It is clear that Methadone Maintenance can significantly reduce the transmission of the AIDS virus among intravenous drug abusers, as it is effective in reducing the sharing of contaminated needles. 131 Further, methadone treatment plans have been proven to cut down on criminal activity as well as improve the health and job prospects of clients. 132

125 Schuster, op. cit., p. 15.

126 Statement of Mark V. Nadel, Associate Director for National and Public Health Issues, U.S. General Accounting Office, before the Select Committee on Narcotics Abuse and Control, March 23, 1990, p. 1.

127 Testimony by Dr. Robert G. Newman, President and Chief Executive Officer, Beth Israel Medical Center, before the Subcommittee on Legislation and National Security, April 17, 1990.

128 NDATUS, op. cit., p. 35.

129 Deborah Mesce, "Administration Drops Proposal for Methadone Program," Associated Press, June 21, 1990.

130 NDATUS, op. cit., p. 41. 131 Schuster, op. cit., p. 15.

132 Philip J. Hilts, "Experts Call for U.S. to Expand Drug Treatment; Bush Aides Are Receptive,” the New York Times, September 20, 1990, p. 1.

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There are philosophical objections to the use of methadone. It is argued that such treatment merely substitutes one addicting drug for another, thereby spawning a generation of methadone addicts. This in turn fuels the black market. Testimony before the committee on April 17, 1990 is illustrative. Dr. Robert Newman, President and Chief Executive Officer of Beth Israel Hospital is questioned by Chairman John Conyers, Jr.:

Mr. CONYERS. Are there federal treatment standards for
Methadone Maintenance treatment?

Dr. NEWMAN. In my estimation, there are the most
rigid, detailed requirements imposed by the Federal Gov-
ernment and by state governments on how Methadone
Maintenance treatment programs should and must operate
than exist in any other field of medicine, and indeed, I
speak for all programs throughout the country that pro-
vide methadone-are subject to repeated, frequent, in
depth surveys to ensure-

Mr. CoNYERS. Well, on page 4, [GAO report on Metha-
done Maintenance) there are no federal treatment stand-
ards for Methadone Maintenance treatment programs.
Further, none of the programs we visited evaluated the ef-
fectiveness of their treatment . . . Now the problem, of
course, is that methadone is a drug itself.

Dr. NEWMAN. It is a medication, yes sir.
Mr. CONYERS. Right. Which creates its own dependency.

Dr. NEWMAN. Sir, it is perhaps a semantic issue, but it is
a very important one, and if I might just distinguish, it is
a medication which reverses, obviously in a very large pro-
portion of patients, reverses the devastating medical and
social impact of heroin addiction. It is a medication which,
like so many, cannot be abruptly discontinued without
leading to side effects, and in that sense, it is--

Mr. CONYERS. Okay, you are splitting it down the middle then. Isn't there a whole market out here on the streets for methadone?

Dr. NEWMAN. There is indeed a black market for methadone and there will continue to be a black market in methadone as long as the demand for legitimate treatment, which we know is life saving, is not available to those who need it.

Mr. CONYERS. People who are buying it on the streets, you may know, are not buying it for treatment.

Dr. NEWMAN. Sir, I disagree. I am sorry, but I truly disagree. In my experience, going back many, many years

Mr. CONYERS. You don't think they are just buying it to get high?

Dr. NEWMAN. Absolutely not.

Mr. CoNYERS. I am glad to learn the drug addicts on our streets are so health oriented, instead of buying illegal drugs, they are buying health providing drugs that the government won't provide. Dr. Newman, give me a break. I didn't just start out here and neither did you. I am not


here to knock methadone, but unless we put the whole
story forward, you know, there will be people listening to
you and me, who will say, but wait a minute, I thought
methadone was a drug. No, Dr. Newman said it wasn't.
But wait a minute, I thought there was a market out on
the street. Yes, he said there is a market, but they are
doing it for treatment. These are good guys buying and
selling this stuff illegally. The doctor said that there are
federal treatment standards, but GAO said there weren't.
So he has got all this good news, but it has got to be quali-
fied ... Why did GAO take such a hard nosed-why is
Congressman Rangel, Chairman of the Select Committee,
beating up on methadone treatment, and he was the one
that requested the GAO report? ... in the interest of ac-
curacy and understanding, we have to separate out some
of this real good news and put it in perspective. I am trou-
bled by this success that you have seen, and I hope that at
least most of it is correct, but at the same time, I have got
to move in a very real

way. 3. Costs of treatment

The task of expanding treatment facilities to meet the needs of drug dependent individuals requires knowing the cost of treatment. We cannot discuss treatment on demand until we know what it would cost. Unfortunately, available information on drug treatment costs is inadequate.

What we know today from existing information is that: (1) although the estimates and percentages are not precise, treatment costs are a very small percentage of the total cost of drug abuse to society-on the order of three percent; and, (2) existing data are limited to estimates of the aggregate treatment costs and average total cost per client served. The important policy questions about the costs of different types of treatment cannot be readily answered

with these existing data. 134 Following the passage of the Anti-Drug Abuse Act of 1986, public investment in drug treatment began to increase. Private sector investments also increased significantly; nearly three out of four workers now have coverage for drug abuse treatment. There have been corresponding increases in the rates of expenditure for drug abuse treatments, even tripling for some private payers. 135

Funds for drug abuse treatment totaled $1.31 billion in 1987; and alcoholism treatment funds totaled $1.71 billion. Nearly one-third (31.1 percent of the total dollars) came from private third-party sources. These sources accounted for only 26.4 percent of the drug abuse funds, compared to 34.6 percent of the alcoholism dollars. State government, which includes funding through block grants, accounted for a larger share of drug abuse funding at 27.2 percent than of alcoholism funding at 20.1 percent. 136 The private sector expenditure of $531 million for drug abuse treatment in 1987 was larger than either the federal or state/local government shares.

133 Hearing on Drug Treatment Abuse before the Subcommittee on Legislation and National Security, April 17, 1990, pp. 76–78.

134 Walllack, op. cit., April 17, 1990, pp. 1-2. 136 Ibid., p. 3.

While NDATUS provides the best estimate of drug treatment costs, it undoubtedly is a conservative estimate . Not all treatment providers are included in this reporting

program for a variety of reasons. 137 This reporting program is voluntary, it does not always allow for detailed responses about funding amounts, it is designed to capture information on formal and distinct treatment programs, and due to the recent expansion in the drug treatment system among private providers, many were likely missed in the survey.

Estimates of program costs are scarce due to the lack of information about costs of specific types of programs in a wide variety of settings which use varied treatment methods and treat different populations. A NIDA-sponsored survey is underway this year by the Bigel Institute for Health Policy which will provide new information on cost differences by type of setting, demographic characteristics of clients, and treatment approaches, making this data collection the most comprehensive one available to policy makers and program managers. 138 The National Academy of Science's Institute of Medicine has a study underway on the financing of drug abuse treatment in the public and private sectors. A NIDA-funded study by researchers at the University of California at San Francisco on the direct and indirect costs of drug abuse in the United States is also being conducted.

Although recent cost estimates for different treatment approaches are not available, a NIDA-sponsored survey-the Treatment Outcome Prospective Study (TOPS)-provided cost data over a decade ago and estimated that residential care, which was the most expensive, cost $2,942 on average for 159 days of treatment; outpatient methadone cost $1,602 for 267 days of treatment; and outpatient drug-free treatment cost $606 for 101 days of treatment. While old estimates, the relative costs for different approaches would likely remain the same.

The 1987 NDATUS figures reported an average cost of $1,707 for each client served in a one year period. This amount was based on about 2.5 clients served in each treatment slot. Based on this estimate, funding per drug treatment slot would average $4,200. Further, NDATUS estimated that private third-party payments provided the highest revenue per client served at $1,200 and state/local governments provided only $854 per client served. 140 According to Wallack,

Gathering better data to answer all the policy questions at hand requires a tremendous undertaking-a new approach entirely. . . . Since programs have no mandate to keep detailed accounting information on costs, these spe


136 NDATUS, op. cit., p. 62. 137 Wallack, op. cit., pp. 4-5. 138 Wallack, op. cit., p. 1. 139 Wallack, op. cit., pp. 6-7. 140 NDATUS, op. cit., pp. 63-72.

cial surveys often find the questions about costs go unan-
swered. 141

The drug abuse treatment system appears to be two-tiered: the private and public sides differ substantially. Private programs, which more often tend to finance inpatient facilities, rely heavily on health insurance payments; and, public programs which more frequently fund detoxification and methadone maintenance programs, rely on government budgets. If drug abuse treatment were part of the general health system, they would be primarily financed by insurance payments and not subject to the roller coaster funding cycles that have plagued drug abuse-related strategies over the past decades. Much of the cost burden of drug abuse is on the social service and criminal justice systems.

Wallack states that the whole philosophy behind the payment systems contributes to the inability of the current treatment system to meet the needs of all individuals:

One problem is based in our philosophy: our payment programs, such as Medicaid and private insurance, treat drug abuse as a chronic condition-that delay in treatment is O.K. If we viewed someone's help seeking as an acute episode we would build more capacity to respond as people sought care. As it is, the supply-side is not keeping up with the demand side because our financing mechanisms are disconnected from the decision to seek care. Privately funded programs are flourishing because of the availability of insurance dollars. Some publicly funded clinics, such as methadone, are chronically oversubscribed because the clients generally have no payment sources, budgets are tight, and the methadone modality is controversial. It is the rigidity of our current financing approach that leads to

shortages in supply.142 NDATUS evidence of utilization rates of treatment facilities surveyed across the country is parallel. Among private, for-profit units the utilization rate is 64 percent; among state or local government owned units, the utilization rate is 90.1 percent; and among private nonprofit units, the utilization rate is 80.7 percent. 143

Another issue which recently added to the difficulty of estimating costs of treatment modalities is the "drug war price gouging. Mallinckrodt Specialty Chemicals Co., the main U.S. producer of methadone, (80-90 percent) is doubling its prices for the drug. ONDCP officials have warned that this could result in thousands of inner-city drug abusers being denied access to treatment programs. Herbert Kleber, deputy national drug control policy director for demand reduction stated, “I am worried about this. . . . An increase of this magnitude could have a major impact on the number of patients that could be treated.” 144 Mark Parrino, president of

141 Responses to questions by Stanley Wallack for the Subcommittee on Legislation and National Security, May 14, 1990, pp. 3-4.

142 Ibid., pp. 5-6.
143 NDATUS, op. cit., pp. 14-15.

144 Michael Ísikoff, "Methadone Maker Doubles Price; Officials Warn of Impact on Treatment Effort," the Washington Post, August 27, 1990, p. 8.

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