Prescription Drug Cost Hikes Could Diminish Medicare Card’s Savings, Groups Say

Prices for medications used by seniors have risen by 20% to 25% since mid-2001, when President Bush first proposed a Medicare prescription drug discount card, and the increase could erode expected savings on retail prices when the discount card program takes effect in a few months, according to researchers for Families USA, the Wall Street Journal reports (Martinez, Wall Street Journal, 3/24). The discount card program, which will begin in May, was created as part of the new Medicare law to help beneficiaries save about 10% to 25% on their prescription drug costs until the program's prescription drug benefit takes effect in 2006 (California Healthline, 3/19). Between January 2002 and January 2003, prices for medications most commonly used by seniors increased nearly 3.5 times faster on average than overall inflation, according to Families USA, which analyzed data from a Pennsylvania program for seniors. Families USA also states that the new Medicare law, under which the cards were created, is "vulnerable to price increases by the drug industry," the Journal reports. To combat price inflation, AARP has begun a full-page newspaper ad campaign requesting that pharmaceutical companies limit price increases to the inflation rate or less. AARP also sent a letter to 16 drug makers this month asking them to influence the market to "curtail greater markups throughout the distribution chain to retail." In addition, Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.) have asked the General Accounting Office to monitor drug prices. Drug makers said that they do not set drug prices, contending that independent pricing publications calculate average wholesale prices, which largely determine retail drug prices (Wall Street Journal, 3/24).

Massachusetts Attorney General Thomas Reilly (D) on Monday announced that his office has launched an investigation into marketing practices for some prescription drug discount cards after receiving more than 40 complaints during the past month from seniors who said ads for such cards were deceptive, the Boston Globe reports. According to the complaints, various companies have sent seniors letters and faxes in which they misrepresented cards' benefits or "erroneously suggested that they were sanctioned by the government," according to Reilly spokesperson Corey Welford, the Globe reports. Some of the brochures said the recipients were being "officially notified" of the opportunity to enroll in the programs and featured small-print disclaimers and logos that resembled government seals. Reilly said, "We have multiple investigations looking at the advertising practices to determine if they're unfair and deceptive to consumers." His office is providing free brochures that help consumers evaluate discount cards (Dembner, Boston Globe, 3/23).