Bush's plan: discount drug cards

Published July 11, 2001|Updated Sept. 10, 2005

The White House is devising a plan that will offer pharmacy discount cards to all older Americans by the beginning of next year in a new strategy intended to provide the elderly quick help on prescription drug costs.

President Bush is to announce the pharmacy discounts Thursday at the same time he lays out a set of principles that the administration hopes will guide Congress in revamping Medicare. The principles will include adding a separate, subsidized prescription drug benefit.

The administration is designing a national version of an approach, adopted by some private insurers, that relies on companies that manage drug benefits to buy prescription drugs in bulk. The companies would sell cards to Medicare patients, who could use them at any pharmacy to purchase their medicine at a reduced rate.

Reports by the New York Times and Washington Post said administration officials were exploring ways to promote the cards' use by quick presidential action, without a need for immediate legislation or federal spending.

One such discount "buyers club" plan is run by Merck-Medco and the Reader's Digest Association. Merck executives emphasized that their plan was not insurance and was not a substitute for proposed Medicare drug benefits. But, they said, it does enable people to get discounts of 10 percent to 30 percent or more at 40,000 participating pharmacies, for a membership fee of $25 a year.

By announcing the drug discounts, the administration is striving to bolster the affordability of medicine for patients who need it most and to address an issue that played a prominent role in last year's campaign.

The discount cards represent the second idea for curbing drug expenses of the elderly that the administration has come up with during the six months Bush has been in office. The first idea, based on a Bush campaign proposal known as Immediate Helping Hand, would create a temporary block grant to help states subsidize drug costs for their poor, elderly residents. It was rejected swiftly on Capitol Hill.

With the new plan, the administration can position itself as taking the lead on prescription drugs just as the Senate Finance Committee is about to begin writing legislation to add drug benefits and update Medicare, 36 years after it was created to provide federal health care insurance to those 65 and over, and to the disabled.

The idea relies on the market-based approach the administration favors and would fall short of the subsidized prescription drug benefit for all Medicare recipients favored by most Democrats. The government would not dictate the size of the discount elderly patients could receive, nor would the plan require federal money, according to the Washington Post.

In its private-sector orientation, the discount plan dovetails with the principles that Bush is preparing to set forth for a more fundamental restructuring of Medicare. The president is scheduled to outline the half-dozen or so principles publicly Thursday morning, after he briefs a group of senators and House members.

Bush will emphasize that any new government drug benefits must be part of a comprehensive bill to revamp Medicare, according to the New York Times. One of the president's goals is to expand the role of private health plans; these include health maintenance organizations, which now provide care to slightly more than 14 percent of the 40-million beneficiaries.

Medicare HMOs typically provide some drug benefits to their members. But about one-third of Medicare beneficiaries do not have any insurance to cover prescription drugs outside hospitals.

Bush made Medicare reform and prescription drug benefits a central theme of his presidential campaign. In his first budget, he sought $156-billion for the purpose over 10 years. In response, Democrats said it would cost at least $300-billion over 10 years to provide minimally adequate drug benefits.

Democrats in Congress say they are open to modest changes in the management of Medicare, to increase competition among suppliers of goods and services. But they say they will not accept any changes that put financial pressure on the elderly to join HMOs.

Sen. Edward M. Kennedy of Massachusetts, the Senate's leading Democratic strategist on health care issues, said: "It's going to become increasingly apparent through the summer that Medicare reform is not going to take place. But there will be a real attempt to pass a good, effective prescription drug program."

Public opinion polls show that millions of elderly people desperately want federal help with covering the cost of prescription drugs, and White House officials said Bush saw drug benefits as a way to mobilize support in Congress for comprehensive changes in Medicare.

Rep. Nancy Johnson, R-Conn., said the discount drug cards made sense as a way to "give seniors immediate relief." Under even the most optimistic timetables, she said, there would be a lag of two years between the enactment of legislation and the start of Medicare drug benefits.

But many drugstores and pharmacists adamantly oppose the cards. The National Association of Chain Drug Stores, which represents companies like CVS and Rite-Aid, tried to persuade the administration to drop its idea.

The association's president, Craig L. Fuller, who was White House chief of staff to Bush's father, said, "A discount card unfairly places the burden for reducing drug prices on the backs of retail pharmacies," requiring drugstores to lower their prices without necessarily affecting the wholesale prices charged by drug manufacturers. Pharmacists say the prices charged by manufacturers account, on average, for more than 70 percent of the retail price of a prescription.

According to the New York Times, Bush supports these principles for overhauling Medicare:

The private sector should play a major role in delivering drug benefits and managing drug costs, but the federal government must provide substantial subsidies for all beneficiaries.

Elderly people should be able to choose the company that, under the administration's plan for an overhaul, would manage their pharmacy benefits. No company should have a monopoly; there should be at least two "pharmacy benefit managers" in each region.

The federal government should set an overall limit on the out-of-pocket pharmaceutical expenses of Medicare beneficiaries.

People content with their existing Medicare coverage could keep it. The government would pay employers to continue drug coverage as part of retiree health benefits.

The government should, for the first time, make payments to HMOs to cover the cost of providing drug benefits. Congress should make other changes to reverse the exodus of HMOs from Medicare. (In the last three years, managed care plans have dropped more than 1.6-million Medicare beneficiaries.)

Today, the House of Representatives is to vote on a bill that would allow imports of low-priced prescription drugs. Bush supported such legislation in the campaign, but now the White House is opposed, saying the bill could increase imports of "unsafe, unapproved or counterfeit drugs."

_ Information from the New York Times and Washington Post was used in this report.