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Prescription Discount Cards Latest Medicare Reform Tactic

White House to Release Broader Plan
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WebMD Feature

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 beneficiaries.

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 sector.

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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 program.

"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.

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