Drug Discount Cards Worth a Second Look for Some Consumers

Some California seniors will benefit from the Medicare discount drug program that takes effect this month, an analysis of 33 national discount drug card sponsors’ prices found. But even with those savings, the remaining cost to consumers is still high.

The analysis by the California HealthCare Foundation and Consumers Union evaluated prices available with each discount card in Los Angeles, San Francisco, San Diego and Sacramento for the 34 most commonly prescribed drugs that seniors take and compared them to the Medi-Cal prices for the medicines. Under California law (SB 393), California Medicare consumers can purchase drugs at the discounted Medi-Cal price.

For people who take a lot of prescription drugs, the savings offered by some of the cards can be significant. Three-quarters of the cards, or 25 in all, offered better discounts for consumers than the Medi-Cal program. Using the cards with the best discounts, consumers would pay prices that were 10% lower than the Medi-Cal rate. For example, prices offered by SHL Rx Card were 10% lower than Medi-Cal prices. The ScripSolutions Freedom card had prices that were 9% percent lower. But even after these discounts, someone who has no other drug coverage and takes several brand-name drugs could still pay between $3,000 and $7,000 out of pocket.

However, the cards do not provide savings in all cases. Discount cards that offer significant savings for one person may offer little or no savings for another, the study found. Whether consumers benefit from discount cards depends if they already have drug coverage, how many prescriptions they take, and the specific drugs they are taking.

Consumers using cards with the least generous discounts would pay 6% more than they would if they purchased drugs at Medi-Cal prices. Consumers who use cards from sponsors with household names such as AARP, Walgreens, and Aetna would pay prices close to what they would pay using the Medi-Cal price. Costco, which sells discounted drugs to Californians, also offered prices that were similar to those for Medi-Cal.

The analysis considered prices offered by sponsors on May 11, the second week Medicare posted prices on its Web site. CHCF and Consumers Union again looked at prices offered by card sponsors on June 7. The discounts provided by most cards were greater than they were when CMS began posting prices on its Web site in early May.

Prices, however, can fluctuate. One card that ranked second best in May was dead last in June, largely because prices for two drugs had doubled, according to CMS data. Under the Medicare drug discount program, card sponsors can change their prices weekly in response to market conditions and competition. However, consumers cannot change cards until November to take advantage of better prices.

“A lot of this is not a surprise,” said Bonnie Burns, a training and policy specialist for California Health Advocates, a not-for-profit Medicare Advocacy Organization that provides training and support to California health counseling programs. “There is considerable variation in all discount card programs, whether it’s Costco, the internal cards of the drug companies or the Medicare discount cards.”

How Other Coverage Matters

The CHCF-Consumers Union analysis looked at how the cards worked for consumers who had other drug coverage. These include a Medigap policy, which pays half of a consumer’s prescription drug costs up to a $3,000 maximum; generic drug coverage from an HMO; coverage for brand-name and generic prescription drugs from an HMO; and Medigap policies without any drug coverage. Consumers who are members of HMOs must ask if their plan offers a Medicare discount card. Those in HMOs that offer exclusive cards must take the HMO’s card and do not have the option to shop around. If their HMO does not offer a card, or if it offers a general card open to all seniors, not just those who are members of the HMO, they can investigate other card options.

The analysis also examined how low-income people who qualify for a $600 subsidy would fare with the cards. Beneficiaries eligible for the subsidy must have incomes no higher than $12,569 for an individual or $16,862 for couples.

People who have no additional drug coverage or coverage only for generic drugs can usually ignore that coverage when they choose a discount card, the study found. Almost any card that offers good prices for medications is likely to save consumers money, even after factoring in their other coverage. For example, someone who takes Glucophage for diabetes and Zoloft for depression and uses the card with the best discounts would pay about $100 less per year than someone who purchased the same drugs at the Medi-Cal price.

People who qualify for the $600 subsidy also benefit from the cards. The credits work like a prepaid telephone card; the price of the drug is simply deducted from the credit amount remaining. Any unused money can be carried over to the next year.

People who have extensive coverage for prescription drugs, such as a plan that covers both brand-name and generic prescription drugs and has a maximum annual benefit of at least $1,000, may discover that they will not save any money with a discount card. For example, a person who contributes a $15 copayment for each prescription probably will not be helped by using a drug discount card, the analysis found.

However, the cards can help people reduce their drug expenses if they are taking drugs that are not included in their HMO’s formulary. In that case, the Medicare discount program would reduce the amount beneficiaries normally pay out of pocket for drugs.

More Drugs, Bigger Savings

The analysis also showed that the more prescription drugs a person takes, the bigger the potential savings. CHCF and Consumers Union created five hypothetical individuals, each of whom took a different regimen of drugs. Using the example of the hypothetical person who took the most drugs and the person who took the fewest medications shows how the number of medications people take affects the amount of savings. The hypothetical person who took the fewest drugs took only Fosamax to prevent osteoporosis. The person who took the most drugs received eight medications to treat a variety of conditions such as heart disease, high cholesterol, arthritis and diabetes. Using Medi-Cal prices, the annual out-of-pocket expense for these people ranged from $934 to about $7,200.

The person taking only Fosamax would pay $93 less than the Medi-Cal price using the Public Sector Partners Prescription Drug Discount Card. The person taking the combination of eight drugs would pay $1,200 less. However, if these people choose a different card, the savings vary. For example, the person taking Fosamax would pay $153 less with the SHL RxCard; the person taking eight medications would pay $876 less — a $324 difference in savings.

Card Drawbacks

The analysis found that cards are worth a second look for people who have:

  • Traditional Medicare coverage and no Medigap policy;

  • Medigap policies with no drug benefit;

  • Coverage only for generic drugs from an HMO that permits members to shop around for a drug card; or

  • Annual drug expenses that exceed $1,000.

But there are some caveats to keep in mind.

Discount card sponsors can change their prices every week, and consumers may not see consistent prices over the year. A good deal one week can evaporate the next. Consumers cannot switch cards to take advantage of price changes.

The CHCF-Consumers Union analysis focused on drugs that account for the greatest proportion of Medicare spending. These drugs are typically expensive brand-name drugs. People taking only generic drugs may not realize the same kind of savings because generic drugs generally are less expensive.

The Medicare reform law did not address the high prescription drug costs for consumers or annual spending for pharmaceuticals, which is now about $250 billion and doubling every five years. The law also did not provide any way for the federal government to control or regulate the prices of drugs. Even if consumers save money with a discount card, those benefits might be temporary. Prices of the drugs can still rise, taking a big bite out of the savings from any of the cards.

Understanding the fine print and searching through the CMS Web site to find the best savings for a consumer’s particular needs remains a big challenge. “Even consumers who are well-educated and actively engaged in assessing their options must set aside time and be willing to put up with some uncertainty as they make decisions about these cards. But people who are older and living with chronic illnesses, or those who don’t have access to the Internet, may find the obstacles to informed choice insurmountable,” said Clare Smith, the executive director of California Health Advocates.

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