Medicare-Endorsed Rx Discount Cards Provide Seniors Temporary Relief at Best

By Joseph J. Wang
jwang@central.uh.edu

While Congress wrestles over the idea of adding an outpatient prescription drug benefit to Medicare, many elderly and disabled Americans continue to find it difficult to pay for their medications out-of-pocket. According to the Centers for Medicare and Medicaid Services (CMS), an estimated 10 million Medicare beneficiaries have no prescription drug coverage. This estimate represents approximately one-third of all Medicare beneficiaries.

On March 6, 2002, CMS released a proposed rule to create a program that would help seniors and other Medicare beneficiaries buy prescription drugs at lower costs. Although not a Medicare drug benefit, the Medicare-endorsed drug discount card would allow seniors to buy their prescriptions at up to 25 percent off retail prices. The proposed rule entitled "Medicare-Endorsed Prescription Drug Card Assistance Initiative" can be read on the CMS website, available at http://www.cms.gov/discountdrugs/.

The Rx discount card is not a new concept. Pharmacies such as CVS, associations such as AARP, and pharmacy benefit managers such as Advance PCS have been offering them for years. Recently, drug manufacturers including GlaxoSmithKline, Lilly, Novartis, and Pfizer have gotten into the game marketing their own Orange Card, Answers Card, CareCard, and Share Card respectively. And these programs are not always limited to one company. Beginning in June 2002, the Together Rx card will represent the alliance of Abbott Laboratories, AstraZeneca, Aventis Pharmaceuticals, Bristol-Myers Squibb Company, GlaxoSmithKline, Johnson & Johnson, and Novartis Pharmaceuticals Corporation.

For the many seniors without consistent prescription drug coverage, Rx discount card programs could provide them some relief from the high cost of medications. Some of these programs do not even charge an annual enrollment fee for eligible participants. These Rx discount card programs, however great they may seem, do have drawbacks.

Finding the right Rx discount cards and then understanding how they work confuse consumers. Each Rx discount card program has its own requirements and benefits. Seniors on several different medications could potentially have a wallet full of these Rx cards, one for each drug taken. Knowing for each card which pharmacies participate in the program, what the discounts are for the various drugs, and how to maintain enrollment under its terms may not only be overwhelming, but maddening. In addition, seniors and other consumers may mistake these Rx cards as insurance cards and buy into them without realizing the benefits.

Another concern surrounding these Rx discount cards is the questionable savings they confer. Some advertised Rx discount cards purport to save consumers up to 60 percent on prescription drugs. However, if it’s too good to be true, it probably is. A recent study by the General Accounting Office (GAO) found that existing Rx discount card save consumers only $3.31 per prescription on average. This savings amounts to only a 10 percent reduction in price. See GAO study, available at http://www.gao.gov/new.items/d02280r.pdf.

Also, even if Rx discount cards actually work and save seniors on average 10 percent, what good does that do for the low-income senior who now pays $270 rather than $300 a month on prescription drugs? Further, Rx drug card programs do not address the problem of rising prescription drug costs. Saving 15 percent means nothing when prescription drug prices are rising at 15 percent as well.

So what make the "Medicare-endorsed" Rx discount card different from other existing cards besides government sponsorship? In a July 12, 2001 U.S. Department of Health and Human Services Fact Sheet, available at http://www.hhs.gov/news/press/2001pres/20010712a.html, CMS states how the Medicare Rx discounts cards would differ:

The Medicare-endorsed Rx discount card initiative is in many respects the same as existing card programs, only the targeted consumer group is Medicare beneficiaries. Any advantages derived from a Medicare Rx card could be offset by the many disadvantages of such cards generally leaving seniors no better off. In evaluating this initiative, one must seriously consider whether our government is simply providing another means of advertising for the big drug companies.

The Medicare-endorsed Rx discount card initiative may provide seniors with greater access to certain prescription drugs, but the initiative is only a temporary solution at best. As prescription costs continue to rise, the discounts will certainly not. Many seniors on fixed-incomes will find it increasingly difficult to keep up. And there will always be a population of low-income seniors who cannot pay for pharmaceuticals, no matter how deep the discounts.

Other solutions that have been suggested are to provide seniors more access to imported pharmaceuticals or to promote the greater use of generic drugs. Both approaches would provide a more affordable alternative to domestic brand-name drugs. But again, these proposed solutions are only temporary, provide no guarantee the drugs will remain affordable to all seniors, and have their own drawbacks. See "Imported Pharmaceuticals May Be Hazardous to Your Health," available at Food/010816Imported.html.

If our goal is to ensure that elderly and disabled Americans have access to prescription drugs, the best solution might be to add an outpatient prescription drug benefit to Medicare. Adding a prescription drug benefit would provide a safety net for low-income seniors without any coverage. It will also put more control in the Medicare program to negotiate bigger discounts and rebates with drug companies and pharmacies and create a competitive environment that will further drive down costs. This issue will remain politically charged and highly contentious on Capitol Hill, but the Bush administration must work with the Congress to make it happen. We owe it to our seniors. They deserve no less.

05/30/02