Medicare Prescription Drug Discount Card Offered by Independent Pharmacists

The Wall Street Journal on Wednesday examined how a group representing some independent pharmacists is "taking aim at their sworn enemies, big pharmacy benefits managers" by offering a Community Care Rx card, a rival to the Medicare prescription drug discount card program (Wall Street Journal, 6/16). When the Medicare card plan was first proposed in 2001, the National Association of Chain Drug Stores and the National Community Pharmacists Association filed a lawsuit, charging that the program was unconstitutional. At the time, a federal judge blocked the program's implementation, saying that the Bush administration lacked the authority to create such a program without first obtaining congressional approval (California Healthline, 1/30/03). The new Medicare law created the drug discount card program, which is available to beneficiaries who do not have prescription drug coverage through Medicaid. They 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. 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. Medicare beneficiaries with annual incomes of less than $12,569 for individuals or $16,862 for couples will qualify for a $600 annual subsidy for their prescription drug costs and will not have to pay enrollment fees (California Healthline, 6/9).

NCPA, concerned that the new Medicare discount cards could decrease independent pharmacies' profits and allow PBMs to lead customers away from drug stores to mail-order programs, are "making it a point" to operate their card differently. For instance, the group is using a technology firm, Computer Sciences, rather than a PBM, to manage the card, enroll beneficiaries. Further, NCPA is requiring that MemberHealth, the PBM it is using to negotiate prices with drug manufacturers, make full disclosures to Computers Sciences about the rates it receives from drug makers. John Rector, vice president for government affairs at NCPA, estimated that between 80,000 and 100,000 people have signed up for the Community Care Rx card, which has an annual enrollment cost of $30 but does not offer a mail-order service. According to MemberHealth's Vice President Scott Hughes, the card is working with about 50,000 pharmacies nationwide and offering an average discount of 30% off retail medication prices. Some independent pharmacists say that by operating a card program that "is more open and pharmacy-friendly than the big PBMs'" programs, they will show that other companies can perform the same functions and offer competitive savings, the Journal reports.

PBMs participating in the Medicare discount program say that their cards offer larger savings than the Community Rx Care card, especially on brand name drugs, because they are more aggressive about bargaining for prices and they receive grater discounts by promoting mail-order programs for patients with long-term treatment needs. According to Mark Merritt, president and CEO of the PBM trade group Pharmaceutical Care Management Association, PBMs in the Medicare program also must disclose to the government an "unprecedented amount of information about their pricing and negotiations. The Journal reports that the "battle" between the independent pharmacists and PBMs "has implications far beyond the Medicare drug card" because PBMs "are poised to take on a big role in managing seniors' pharmaceutical needs," when the drug benefit takes effect in 2006 (Wall Street Journal, 6/16).