Prescription Drugs: Questions About Discount Cards - Copyright, Center for Medicare Advocacy, Inc.

QUESTIONS ABOUT MEDICARE PRESCRIPTION DRUG DISCOUNT CARDS

Both the House of Representatives and the Senate included prescription drug discount cards in the Medicare prescription drug legislation, H.R. 1 and S. 1, respectively, that was passed earlier this year. The discount drug cards are designed to provide transitional assistance to Medicare beneficiaries until the prescription drug benefit established under the legislation goes into effect in 2006.

The House and Senate Conferees working on the Medicare prescription drug legislation have announced that an agreement has been reached on provisions for a transitional discount drug card for Medicare beneficiaries. In analyzing these provisions, Medicare beneficiaries, their families, and advocates need to consider carefully whether the discount drug cards will provide the relief claimed by their proponents.

Will the discount drug cards reduce prescription drug costs as much as anticipated?

Discount drug card proponents claim that the cards will save beneficiaries up to 20% of the cost of their drugs. Recent reports by the General Accounting Office (GAO) suggest that the savings may not be as substantial, and may vary across geographic regions and across pharmacies within geographic regions. GAO-03-912 (9/2003) In some states, such as California, older people and people with disabilities receive better discounts simply by using pharmacies that participate in the state Medicaid program, since those pharmacies must give Medicare beneficiaries the discounted Medicaid price. In addition, beneficiaries need to consider the yearly enrollment fee when calculating the amount of potential savings from a discount card program.
Will the prices for prescriptions be guaranteed for any specific length of time?

One of the factors that older people and people with disabilities will consider when choosing among available discount drug cards will be how much the different card sponsors charge for their prescriptions. But will those card sponsors be required to maintain their prices from one enrollment period to another, or will they be able to increase the costs to their enrollees at any time? Experience shows that Medicare HMOs reduce their costs over time by charging their enrollees higher co-payments for specific services. Will discount drug card sponsors take this approach, particularly with more costly drugs?
Will beneficiaries be "locked in" to a discount card for any specific length of time?

Suppose a discount card sponsor decides to reduce the discounts it offers in the middle of an enrollment period. Or suppose a doctor changes a beneficiary’s prescription to a drug that is not on the discount card formulary. Will the beneficiary be able to switch plans, or will the beneficiary be required to remain in the plan until the next enrollment period, even though the beneficiary no longer is receiving savings from the plan?
Will discount card sponsors be required to offer discounts on all prescriptions?

The GAO found no uniformity among current discount card programs. Cards sponsored by pharmaceutical manufacturers generally provide discounts only on the prescriptions manufactured by that company. Cards sponsored by pharmacy benefit managers (PBMs) offer discounts on a wider variety of drugs. If transitional Medicare discount drug cards use formularies, or restrict discounts to certain drugs, then beneficiaries may have a hard time choosing among plans, each of which discounts some but not all prescriptions the beneficiaries use.
What consumer protections will be included in the Medicare prescription drug legislation to assure that the rights of older people and people with disabilities are protected?

According to the GAO, 16 states have enacted consumer protection laws regulating prescription drug discount cards in their states. These include laws which require that: (a) the card state prominently that it is not insurance coverage; (b) the reporting of discounts not be fraudulent, misleading, or deceptive; (c) the discount be specifically authorized by separate contracts between the card administrator and each participating pharmacy or pharmacy chain. The laws result from situations in which pharmacies reported as participating in a discount card program were not in fact part of the program, consumers were confused about the amount of the discount and where the card could be used, or consumers were misled about the proximity of participating pharmacies.

Prescription drug cards may provide limited relief from the high cost of prescription drug coverage for some older people and people with disabilities. In order for the cards to be broadly useful, however, they must provide a stable, guaranteed discount on all drugs, and the program must include protections to assure against misleading, deceptive and fraudulent information. Overall, a prescription drug discount card is no substitute for a uniform, stable, guaranteed prescription drug benefit that is included in and administered by the Medicare program.