Department of Veterans Affairs Prescription Drug Discounts Exceed Those Under Medicare Cards, Study Finds

The prescription drug discounts that veterans receive through the Department of Veterans Affairs exceed the savings that are available through the new prescription drug discount cards, according to a new study released Wednesday by Families USA, the Hartford Courant reports (MacDonald, Hartford Courant, 6/3). The discount card program, which was created as part of the new Medicare law and debuted Tuesday, is available to Medicare beneficiaries who do not have prescription drug coverage through Medicaid. Beneficiaries have access to a number of discount cards sponsored by private companies and endorsed by Medicare. Card sponsors can charge an annual enrollment fee of as much as $30 and likely will offer savings on at least one medication in each of 209 classes of treatments commonly used by Medicare beneficiaries. Medicare beneficiaries with annual incomes of less than $12,372 for individuals or $16,608 for couples will qualify for a $600 annual subsidy for their prescription drug costs and will not have to pay enrollment fees. Beneficiaries can use the Medicare Web site or call 1-800-MEDICARE to make card-to-card comparisons of prescription drug discounts. According to HHS Secretary Tommy Thompson, the discount cards provide average savings of about 10% to 17% for brand-name medications and 30% to 60% for generic treatments (California Healthline, 6/2). In a comparison of the 20 prescription drugs most commonly prescribed to Medicare beneficiaries, Families USA found that the lowest prices available through the Medicare cards for 10 of the medications were at least 50% higher than prices negotiated by VA, according to Families USA Executive Director Ron Pollack. The study also found that the lowest drug card price for Lipitor, an anticholesterol medication and the most frequently prescribed drug for seniors, was 59% higher than the price available through VA. According to the study, the Medicare drug card price was 46% higher than the VA price for the anticholesterol drug Zocor, 56% higher for acid reflux treatment Prevacid and 65% higher for blood pressure medicine Norvasc. VA discounts also exceeded Medicare drug card prices for the other 10 drugs, although only by 7% in one case (Hartford Courant, 6/3). A price comparison chart from the Families USA study is available online.

Pollack criticized Congress for not including in the new Medicare law a provision that would allow the federal government to negotiate prices with pharmaceutical companies, as VA does. He said, "Instead of the drug discount cards, Congress and the president should have provided real price relief for America's seniors by enabling them to bargain for lower prices" (Hartford Courant, 6/3). He added, "Other than political pressure from the drug lobby, there is no sensible reason why Congress and the president refused to take this far more effective step" (Barfield Berry, Long Island Newsday, 6/3). Sen. Debbie Stabenow (D-Mich.) said, "The phenomenal power of federal bulk-purchasing has been proved by the Veterans Administration, but those crafting the Medicare bill yielded to the influence of the pharmaceutical industry and blocked Medicare from using its large pool of beneficiaries to negotiate good deals." Sen. Edward Kennedy (D-Mass.) said, "A genuine discount program would provide a single discount card for Medicare, and the [HHS] secretary ... would negotiate large savings and fair prices for senior citizens, just as the secretary of Veterans Affairs does for veterans" (Hartford Courant, 6/3). He added, "We need to end this shell game and find honest solutions to the crisis of excessive costs of prescription drugs" (Heldt Powell, Boston Herald, 6/3).

However, Thompson said on Tuesday that the VA model would not be practicable for the Medicare population because VA runs the hospitals where drugs are distributed and Medicare is a far larger program. "It's not an apples-to-apples comparison, he said, adding that allowing the federal government to negotiate drug prices for Medicare would have a distorting effect on the drug market (Heil, CongressDaily, 6/2). Rick Smith, a spokesperson for the Pharmaceutical Research and Manufacturers of America, added, "Medicare would be a price fixer, not a negotiator" (Long Island Newsday, 6/3). CMS spokesperson Peter Ashkenaz said the comparison between VA and Medicare "isn't ... fair" (Boston Herald, 6/3). In a statement, the Pharmaceutical Care Management Association, said, "The VA national formulary requires access to prescription drugs in 31 classes. By contrast, the new Medicare drug discount card program requires that beneficiaries have access to drugs in 209 therapeutic classes" (Hartford Courant, 6/3). Phil Blando, a spokesperson for the PCMA, added that the Families USA report did not take into account lower-cost, mail-order drugs or generic drugs, which account for about half of all prescriptions. He said, "These data wouldn't pass muster in a Statistics 101 course" (Long Island Newsday, 6/3).

At a news conference Wednesday, other congressional Democrats "ratcheted up their criticism" of the Medicare drug card program, citing slow enrollment, according to CongressDaily (CongressDaily, 6/3). On Tuesday, Thompson said that 2.87 million Medicare beneficiaries have enrolled in the program, but 2.3 million of them were automatically enrolled as a result of being a member of a Medicare managed care plan. Only about 500,000 beneficiaries signed up for a discount card on their own (California Healthline, 6/2). Senate Minority Leader Tom Daschle (D-S.D.) said, "Seniors have rejected the cards as a way to deal with drug prices. This is a huge embarrassment to the administration -- and a clear message that something must be done" (CongressDaily, 6/2). Sen. Hillary Rodham Clinton (D-N.Y.) said that instead of allowing beneficiaries to purchase lower-cost prescription drugs from Canada and giving the government the authority to negotiate with drug companies, Congress has "saddled our seniors with a confusing game of cards" (Long Island Newsday, 6/3). Rep. Henry Waxman (D-Calif.) released a study Wednesday showing that the lowest discount card prices for two commonly prescribed acid reflux drugs -- Nexium and Protonix -- have increased by 13% and 19%, respectively, between May 3 and June 2. Democrats vowed to continue to push for legislation that would lower prescription drug prices, including legalizing prescription drug reimportation and allowing the government to negotiate with drug companies. They also said they will push for legislation that would automatically enroll low-income beneficiaries in the discount card program, a move opposed by the Bush administration (Kemper, Los Angeles Times, 6/3).

The confusion and controversy surrounding the drug card program is only the beginning of problems for the Medicare prescription drug benefit, some experts say, noting that seniors will face "even more bewildering choices" when the drug benefit takes effect in 2006, according to the Scripps Howard/Detroit News. Tricia Neuman, a Kaiser Family Foundation vice president and director of its Medicare Policy Project, said that CMS "is mounting this huge education effort to make people aware of the discount cards, and then next year they're going to the next phase that will require telling people to forget everything they've just learned. The expectation that the discount cards are a dry run for the full program in 2006 may not be accurate, given all the things that may be different." A Commonwealth Fund report released on Monday found that it is still unclear whether most Medicare beneficiaries will benefit from the new drug coverage over the long-term. According to the report, about 42% of beneficiaries have annual drug expenditures higher than $2,250 -- when the so-called "doughnut hole" gap in coverage begins. Beneficiaries participating in the drug benefit pay a $250 deductible and 25% of the next $2,000 in spending. They are then responsible for all annual drug costs between $2,250 and $5,100, at which point catastrophic coverage begins and Medicare covers 95% of all remaining drug expenses. The gap in coverage is expected to widen because of indexing for inflation. By 2013, an individual might have to pay as much as $6,400 for drugs before catastrophic coverage kicks in (Bowman, Scripps Howard/Detroit News, 6/3). The report is available online.

To protest the new Medicare drug benefit, Sen. Mark Dayton (D-Minn.) has sent a letter to the Office of Personnel Management, requesting that his prescription drug coverage be dropped until 2006. At that point, he has asked that his maximum benefits be scaled back by nearly 30% to match the new Medicare drug benefit. Dayton said, "The new [Medicare law] is going to leave Minnesotans and Americans continuing to pay exorbitant prices, prices that are going up unrestrained" (George, Minneapolis Star Tribune, 6/3).

PBS' "Nightly Business Report" on Wednesday reported on the Medicare prescription drug discount cards. The segment includes comments from Sen. Norm Coleman (R-Minn.); Daschle; Diane Duston, a health policy analyst with Prudential Equity Group; and CMS Administrator Mark McClellan (Woods, "Nightly Business Report," PBS, 6/2). The complete transcript is available online. In addition, "To the Point," a national news program co-produced by KCRW and PRI, on Thursday will include a discussion of the drug discount cards and the political benefits of Medicare reform (Olney, "To the Point," KCRW/PRI, 6/3). The complete segment will be available online in RealPlayer after the broadcast.