CMS Clarifies Decision on Together Rx Program, GSK and Bristol-Myers Reinstate Discounts for Seniors

CMS officials yesterday announced that pharmaceutical companies do not have to offer the same discounts to Medicaid beneficiaries as they offer to low-income Medicare beneficiaries under the Together Rx pharmacy discount card program, the Wall Street Journal reports. The decision, a clarification of the agency's earlier interpretation of federal law, "dispels uncertainty" about Together Rx that had prompted GlaxoSmithKline and Bristol-Myers Squibb earlier this month to reduce their discounts under the program. As a result of the decision, the two companies said that they plan to restore the discounts and reimburse Together Rx members for the additional costs they paid as a result of the decreased discounts (Hensley, Wall Street Journal, 10/24). Under Together Rx, Medicare beneficiaries who do not have prescription drug coverage and have annual incomes up to $28,000 for an individual and $38,000 for a couple receive 20% to 40% discounts on their prescription drug purchases. Abbott Laboratories, AstraZeneca, Aventis Pharmaceuticals, Bristol-Myers, GSK, Johnson & Johnson and Novartis Pharmaceuticals established the program in April. In a June 24 memo sent to the companies, CMS Administrator Tom Scully said that Together Rx, which allows members to pay less than Medicaid for many treatments, violated federal law. Under federal law, pharmaceutical companies must charge Medicaid the "best price" for medications. In response, GSK and Bristol-Myers reduced their Together Rx discounts (California Healthline, 10/3).

In a letter sent to the pharmaceutical companies this week, Scully said that the "uncertainty" about the Together Rx discounts "was simply a misunderstanding," the Journal reports (Wall Street Journal, 10/24). Scully compared the Together Rx discounts to "direct-to-patient coupons," which are exempt from the Medicaid "best price" regulation (Petersen, New York Times, 10/24). "We clarified their discounts were fine all along, and they aren't affected by our policy," Scully said (Wall Street Journal, 10/24). Bristol-Myers officials said that the company mailed refund checks yesterday to Together Rx members who received reduced discounts on treatments manufactured by the company. GSK officials said that the company plans to reimburse members within 10 days (Brubaker, Washington Post, 10/24).