Federal Court Blocks Bush Plan for Rx Drug Card

A federal court yesterday temporarily delayed the implementation of President Bush's plan to offer prescription drug discount cards to Medicare beneficiaries, ruling that the White House may have "lacked the authority" to establish the program without congressional approval, the Washington Post reports (Goldstein, Washington Post, 9/7). Under the plan, which was slated to begin in January, pharmacy benefit managers would negotiate discounts with drug manufacturers and pharmacies and then sell cards to Medicare beneficiaries for up to $25, allowing them to purchase pharmaceuticals at a 15% to 20% discount. The National Association of Chain Drug Stores and the National Community Pharmacists Association filed suit in July to block implementation of the plan, arguing that the administration lacks the "authority" to implement the plan without congressional approval and violated federal rules by drafting the plan without open meetings or a public comment period. The pharmacy groups say that the plan would force pharmacies to offer discounts without requiring drug makers to lower prices (USA Today, 9/7). They add that the plan would offer seniors only "relatively small" savings. In his ruling, Judge Paul Friedman of U.S. District Court in the District of Columbia issued a temporary injunction against the plan, adding that the pharmacy groups have a "substantial likelihood of success" in winning their case. The injunction, which has no set time limit, "essentially blocked" the pharmacy discount plan on an "emergency basis."

In the case, Justice Department attorneys argued that HHS had "proper legal authority" to implement the program without congressional approval, saying that Congress had "given authority for the program when it gave the department broad latitude to run patient education programs" (Washington Post, 9/7). They said that the program serves only to "educate" Medicare beneficiaries about the discount cards (Lueck, Wall Street Journal, 9/7). However, Friedman said that the plan amounted to "creating a whole new program," adding, "This is far more than an educational or advisory service" (Fulton, CongressDaily/AM, 9/7). Justice Department attorneys also "sought to rebut" allegations that HHS should have opened the plan to public comment, arguing that HHS would "not actually" regulate the program (Washington Post, 9/7). In his decision, Friedman rejected that argument, ruling that the plan represented a "substantive rule and a substantive program that the public at large should have been invited to comment on" (CongressDaily/AM, 9/7).