New Prescription Drug Plan Facing Same Old Opposition

The Bush administration Friday rolled out a revised proposal for a Medicare-endorsed discount card to help seniors save money on prescription drugs, but opposition from chain drugstores and pharmacists again threatens to kill it.

A government-endorsed discount card could produce average annual savings of $170 for as many as 10 million elderly or disabled beneficiaries, and “that is not chicken feed,” said Tom Scully, administrator of the Centers for Medicare and Medicaid Services.

But even if the plan does survive legal challenges, he said it will not meet the growing demand for full Medicare drug coverage.

“The bottom line,” Scully said, “is this is not going to fix seniors’ drug problems.”

Under the plan, senior citizens would pay as much as $25 to get one of several Medicare-endorsed private drug-discount cards. The endorsed cards, unlike some discount cards offered by drug manufacturers, would be available to all Medicare beneficiaries regardless of income.

Presented with a prescription at a pharmacy or as part of a mail order, the card would entitle the beneficiary to get drugs at 10% to 13% below the normal price.

The savings would come not from government subsidies but from discounts and rebates the private card providers negotiate with drug manufacturers and pass on to senior citizens, officials said.

Card providers also would have to publish on the Internet their prices on a minimum of 119 drugs. Scully said this pricing “transparency” would enable senior citizens to shop around for the card that offers the best prices and, in turn, that process would foster competition among card providers and drive prices even lower.

Key to concerns about the discount card proposal is the government’s role in administering it. The Bush administration insists the card is not a new government program, which would require congressional authorization, but rather a “market-driven” program organized by the government.

The National Assn. of Chain Drug Stores, along with the National Community Pharmacists Assn., sued in federal district court last year to block the Medicare card, arguing that the CMS had exceeded its constitutional authority.

A federal district judge agreed and stopped the Bush administration from implementing the plan. Late last year, the judge allowed the administration to try again, if this time it went through the normal, public rule-making process.

But in February, when the administration unveiled a preliminary proposal and invited public comment, the trade groups again registered their objections in court.

Although the final rules unveiled by the administration Friday appear to be more favorable to drugstores, the group remained unappeased.

The trade groups see in the plan a collusion between the Bush administration and pharmacy benefit managers, the private companies that administer the prescription-drug portion of health insurance policies. They are particularly concerned that the program would take prescription drug business away from drugstores and shift it toward mail-order purchases.

“Retail pharmacy doesn’t want to bear the cost of this program,” said Crystal Wright, a spokeswoman for the drugstores.

The elderly use more prescription drugs than any other segment of the population. But Medicare, the program for 40 million older and disabled Americans, does not cover drugs that are taken outside of a hospital stay.

The fate of the plan now lies with U.S. District Judge Paul Friedman, who could rule on its legality sometime in the new few months, or with Congress, which could clarify the CMS’ authority with legislation.

In fact, the House Medicare reform bill authorizes such a program, and some Senate proposals--all of which failed last month to gain enough votes to proceed--also included provisions for a temporary discount card.

“The issue is definitely in play in Senate legislation,” said Paul Cotton, an AARP Medicare specialist.

That advocacy group, which represents 35 million Americans age 50 and older, endorses the discount card as a “building block” toward a comprehensive Medicare drug benefit, Cotton said.