The present invention provides pharmaceutical compositions and methods for the instillation of lipid vehicles comprised of liposomes containing sphingomyelin or sphingomyelin metabolites to prevent, manage, ameliorate and/or treat disorders involving neuropathic pain and aberrant muscle contractions, such as what occurs in bladder hyperactivity disorders such as interstitial cystitis (IC) in animals or humans in need thereof. Also provided is a liposome-based delivery of drugs, e.g., antibiotics, pain treatments and anticancer agents, to the bladder, genitourinary tract, gastrointestinal system, pulmonary system and other organs or body systems. In particular, liposome-based delivery of vanilloid compounds, such as resiniferatoxin, capsaicin, or tinyatoxin and toxins, such as botulinum toxin is provided for the treatment of bladder conditions, including pain, inflammation, incontinence and voiding dysfunction.