Medicare Conferees Reach Tentative Deal on Prescription Drug Discount Cards
Members of the conference committee charged with reconciling the House and Senate Medicare bills (HR 1 and S 1) yesterday announced they have reached a tentative agreement on a proposal that would give Medicare beneficiaries drug discount cards before a drug benefit takes effect, the Wall Street Journal reports (Rogers, Wall Street Journal, 8/6). Under the agreement, Medicare beneficiaries could purchase drug discount cards from several private companies for a fee of as much as $30 per year. The pharmacy benefit managers that would administer the cards would be required to pass on some savings they negotiated with drug makers to beneficiaries (Goldstein, Washington Post, 8/6). Some of the negotiated savings could be used to administer the programs, the AP/Detroit News reports. PBMs would also be required to review beneficiaries' prescriptions to prevent adverse drug interactions (Dalrymple, AP/Detroit News, 8/6). Under the agreement, beneficiaries with incomes less than 135% of the federal poverty level, or $12,123 per year for an individual, would be eligible for an annual drug subsidy of $600 (Wall Street Journal, 8/6). The tentative agreement represents a consensus among congressional staff members, and conference committee members still must agree to the deal before it becomes final, the Post reports.
The tentative agreement does not include a provision in the Senate bill that would have required companies that administer the discount cards to guarantee savings of at least 20%, the Post reports (Washington Post, 8/6). Negotiators also dropped a Senate bill provision that would have "lock[ed] in prices for cardholders" by forbidding PBMs from raising drug prices more than once every 60 days (Wall Street Journal, 8/6). In addition, the agreement "softens" a House bill provision that would have required PBMs to report to the federal government the exact amount they paid drug makers for medicines, the Post reports. Instead, negotiators agreed to require PBMs only to report their average savings to federal officials (Washington Post, 8/6). Conference committee members still have not agreed upon how much beneficiaries who receive the subsidy should be required to contribute in copayments. Conferee Sen. Don Nickles (R-Okla.) has been a "strong proponent" of requiring all beneficiaries to pay 10% of the cost of drugs before receiving any assistance, as a strategy to prevent "excessive use" of medicines, the Journal reports. Some Democrats, however, favor a sliding copay based on income, under which beneficiaries with annual incomes of 100% of the federal poverty level, or $8,980 for an individual, would pay less than 10% of their drug costs before receiving assistance.
Negotiators agreed the cards would be issued within six months after final passage of Medicare legislation, anticipated this fall. Sen. Charles Grassley (R-Iowa) said, "We have to make sure seniors have access to the drug discount cards as soon as possible after the final approval of the prescription drugs bill." According to the Journal, the Bush administration hopes to roll out the discount cards by April 1, 2004. CMS Administrator Tom Scully said, "We're working as if the bill is passed already. We have to get this done by April 1 next year, and to do that, you can't have a lot of bells and whistles." A Medicare drug discount card is "crucial" to Republicans' "political fortunes" because it could be the "one tangible new Medicare drug benefit" that beneficiaries receive prior to the November 2004 elections, the Journal reports. Further, even if the overall Medicare reform bill fails to pass, the significance of the drug discount card would not be "diminished," as some health policy analysts have suggested that beginning Medicare drug coverage with a discount card might be the best approach, the Journal reports (Wall Street Journal, 8/6).
Some conservative lawmakers have said that lawmakers' and the public's support for Medicare reform legislation will wane over Congress' August recess, allowing conservatives to "push key changes" to the legislation when lawmakers return in September, the Washington Times reports. Rep. Mike Pence (R-Ind.) said, "It is my fondest hope that the American people will let their representatives know what they think of a massive new entitlement," adding that the recess will "really giv[e] the American people time to think about it. And that's a good thing for those of us who'd like to see a much more limited, much more fiscally responsible plan." Sen. Trent Lott (R-Miss.) said, "I hope ... members [of Congress] will be told that the American people don't want either bill." Pence said he expects that the 19 House Republicans who voted against the House's Medicare reform proposal, including himself, "will have company" after lawmakers return from their August recess. Some Democrats are predicting that support for the House and Senate bills will likely decline over the recess, but it could mean that beneficiaries will begin demanding "heftier drug benefits," the Washington Times reports. Sen. John Rockefeller (D-W.Va.) said he hopes that Democrats can use those demands to push for a more generous drug benefit. Rep. Jeff Flake (R-Ariz.) said that with House conservatives and Senate Democrats attempting to influence the bill, "hopefully we hit an impasse and delay it." Flake added President Bush could then alter the drug benefit to target only low-income beneficiaries (Fagan, Washington Times, 8/6).
The New York Times today looks at potential cuts in Medicare payments for cancer treatments, which the Bush administration is expected to propose soon, based on new data suggesting that the government pays "far more than market price" for such treatments. To offset such a reduction, the administration would propose a small increase to doctors who administer the medications to patients in their offices. According to Bush administration estimates, oncologists nationwide made $700 million in "Medicare drug profits" in 2002 because "Medicare payments were in excess of widely available market prices," the New York Times reports. Medicare pays 95% of the average wholesale price for medications administered in doctors' offices. The administration maintains that AWP is "not defined in law or regulation" and is often higher than what doctors actually pay. For example, the list price of leucovorin calcium, used to treat some types of colon cancer, is $18.44, but doctors can procure the medication for $2.77. Medicare covers $17.52 of the list price, however, the New York Times reports. In an interview with the New York Times, Scully said, "It is abundantly clear, from many studies and congressional hearings, that we are significantly overpaying for outpatient drugs under Medicare." He added that within two weeks the administration will announce proposed rules to make Medicare payments more closely reflect prices charged in the market. The administration is considering three options, including paying a flat portion of AWP; prohibiting Medicare contractors from paying more for drugs administered to Medicare beneficiaries than they pay for drugs administered to privately insured patients; and performing surveys of the pharmaceutical market and paying market prices available to doctors. Both the House and Senate Medicare bills also would address the alleged overpayments for some outpatient medications (Pear, New York Times, 8/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.