July 11, 2001 (Washington) -- President George W. Bush is
expected to announce a discount card plan as an immediate way of keeping
prescription drug prices down for seniors. Depending on how the plan is
structured, the savings could be 15% or even higher for Medicare
While details were limited prior to the rollout of Bush's
broader effort to restructure Medicare on Thursday, some experts believe the
idea is worth watching particularly since it's worked in the private
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For example, Merck-Medco and The Reader's Digest Association
launched a prescription drug plan two years ago. Some 40,000 drug stores
participate, reportedly offering savings of up to 40%. The enrollment fee for
the plan is $25 per person or $40 per household. AARP, formerly known as the
American Association of Retired Persons, has a similar approach that yields a
drug discount of about 15% for members, according to a source familiar with the
"The president's action adds real momentum to achieving a
prescription drug benefit in Medicare," said William Novelli, executive
director and CEO of AARP, in a statement. However, while the advocacy group
praised the pharmacy discount card notion, Novelli said it was not a substitute
for a permanent solution to the problem of escalating drug costs.
Jim Manley, press secretary to Sen. Edward Kennedy (D-Mass.)
tells WebMD the senator says the drug discount card is just a small step toward
solving the Medicare problem.
But the discount card notion is worth exploring, at least in
the short run, says Robert Reischauer, former director of the Congressional
Budget Office and currently the executive director of the Urban Institute.
"Symbolically, it's important. I think that the
administration is saying the legislative process in this country is complex and
slow, and we will try to do what we can in the meantime," he says.
One of the pluses of the discount card approach is that it
could be set in motion without the political complexities of enabling
legislation. However, there are some minuses, says Reischauer.
For example, younger consumers could wind up paying more for
prescriptions. "We're talking about redistributing the burden, but right
now it's hard to say that the distribution of the burden is equitable, when
many of those who have the least ability to pay, and the most pressing need for
prescription drugs, pay the highest prices," Reischauer tells WebMD.
PhRMA, the drug company trade association, declined to comment
on the discount card idea, although the group supports leaving the prescription
drug question largely to the marketplace.
In fact, the Bush administration envisions a competitive system
with discount plans vying for seniors' business. But it's not clear what
beneficiaries would be getting if they sign up.
"This might be a good thing. It's just not the same as
insurance," Tricia Neuman, ScD, a vice president of the Kaiser Family
Foundation, tells WebMD. Newman says the proposal coming on the eve of Bush's
Medicare reform announcement could actually muddy the waters.