March 25, 2004 -- Federal officials released Thursday the names of 28 companies cleared to offer national Medicare-endorsed prescription drug discount cards for seniors starting in June. The move clears the way for the companies to start marketing their cards to millions of elderly and disabled beneficiaries nationwide.
Many companies are set to offer more than one card, and officials said that they do not yet have a handle on how many cards beneficiaries will actually have to choose from when card enrollment begins May 1.
Another 43 sponsors were approved to offer prescription discount cards in individual states for seniors enrolled in Medicare Advantage, the managed care program formerly known as Medicare+Choice. About 10% of Medicare's beneficiaries participate in the plans.
The announcement is the culmination of a long campaign by the Bush administration. President Bush first announced his intention to set regulations providing the cards in July 2001, only to have the plan struck down in federal court. Congress finally approved legal changes making the prescription discount cards possible as part of Medicare reforms signed in November 2003.
Health and Human Services Secretary Tommy G. Thompson said that his agency's plan to display on Medicare's web site public estimates of the discounts available with each card would help spur competition and drive down prices. Officials in the government and in the drug insurance industry have estimated that most seniors could see discounts on their prescription medication between 10% and 25% with the cards.
"Competition is going to drive these cards and drive the enrollment and drive the prices," he said.
Thompson said that all cards must offer discounts on at least one drug in 209 classes, covering nearly all drugs that most seniors use.
Seniors will be able to apply for a card by paying an enrollment fee of up to $30 per year. Thompson said that he expects a significant portion of card sponsors to waive the fee in order to attract more customers, though it remains unclear how many will do so.
Approximately 7 million low-income seniors will also be eligible to enroll for the discount cards with a waived fee if they also qualify for the $600-per-year credit to help pay for their prescription drugs. Officials said that they plan on reaching about 4.5 million eligible seniors and have set aside $4 to $6 billion to pay for the credits.
Most of the cards are set to be administered by pharmacy benefit management companies, or PBMs. Those companies use restricted drug formularies, bargaining power, and other tools to negotiate lower bulk drug prices for customers.
Most of the companies don't expect to make much money on the discount card program, but instead are using it to build brand loyalty among seniors. They will have to choose which drug plan they want, said Mark Merritt, president of the Pharmacy Care Management Association, a PBM industry group.