Comparisons Expected to Lower Drug Prices

Politicians and Consumers Will Be Watching Medicare Site for Drug Costs

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April 13, 2004 -- Publicly available price comparisons expected to accompany Medicare's new prescription drug discount card plan could help lower drug prices for all consumers, analysts and experts say.

In just more than two weeks, 40 million-plus Medicare beneficiaries will get a first-ever chance to compare prescription drug prices on the agency's Internet site, The function, due for launch on April 29, is meant to help beneficiaries choose from among dozens of approved cards based on savings offered for different drugs.

Card sponsors begin taking applications in May, and discounts are set to begin June 1. Beneficiaries will also be able to use the site through an operator by calling 1-800-MEDICARE.

Medicare officials say that when "Price Compare" goes online, seniors will be able to find out which pharmacies and which cards offer the deepest discounts in their zip code. "It will also point to other ways you can save" including cheaper brand name alternatives and generics, a Medicare spokesperson tells WebMD.

But analysts also point out that the site will represent the first-time consumers -- and even politicians in Washington -- will have a one-stop comparison of prescription drug prices. Double-digit annual hikes in drug prices are one of the biggest issues among consumers in this election year and a contentious political topic on Capitol Hill.

"Prices should become more competitive," says Richard Curtis, president of the Institute for Health Policy Solutions, a nonprofit think tank in Washington.

Drug companies have often relied on murky pricing structures to keep insurance companies and consumers guessing about how much others are paying for drugs. Comparisons could help change that. "It increases the incentives for them to have a lower price," Curtis says.

Ed Dillon, co-owner of Grubb's Care Pharmacy in Washington, calls the discount plan and its price comparisons a "landmark shift" in the way seniors shop for health care. "For the first time patients can choose the plan they participate in instead of it being mandated," he says.

Dillon warns that even with the 10% to 25% discounts Medicare is anticipating, drug prices have a tendency to bunch up instead of varying widely, which could limit the usefulness of comparisons for seniors. "The industry is fairly standard between 12% and 17% [discount off of average wholesale prices]. If that's the extent of it, this web site is not going to be knock-your-socks-off information," says.

Bill Vaughan, chief lobbyist at the consumer group Families U.S.A., says that the comparisons will help seniors save money, even though his group is skeptical about the discount card program as a whole. "Any kind of ability to shop more is helpful. It's got to help because it can't be much worse than it's been," he says.

Of course, individual seniors won't be the only ones comparing drug prices with the new program. Insurers, analysts, and politicians will also be watching closely, a fact that is bound to affect future debates on how -- or if -- the government should act to lower medication costs.

Several senators have already directed government investigators to monitor drug prices on the site and report back to Congress.

"It's the public spotlight on this and groups doing comparison shopping that I think will be awfully important," Vaughan says.

Medicare Tries to Get the Word Out

Medicare is relying largely on state health insurance outreach programs to tell seniors about the web site and about additional benefits available to low-income beneficiaries. The agency announced last week that it is sending $21 million to states to help with education efforts.

Officials all over the country have begun Medicare "town hall" meetings to help explain the program and other changes in the Medicare law to seniors.

"I think they're going to need some assistance using the site," Kansas insurance commissioner Sandy Praeger tells WebMD. "We're dealing with a group that first of all doesn't like change and it is having to deal with change," she says.

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SOURCES: Spokesperson, Centers for Medicare and Medicaid Services, Washington. Ed Dillon, co-owner, Grubb's Care Pharmacy, Washington. Richard Curtis, president, Institute for Health Policy Solutions. Bill Vaughan, chief lobbyist, Families U.S.A. Sany Praeger, Kansas Commissioner of Insurance.
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