The future for Medicare drug benefit is in the cards

Provider discounts to test market controls

March 05, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

WASHINGTON - More than 100 companies have lined up to offer prescription drug discount cards for uninsured seniors - the first major step toward the implementation of a controversial 2006 Medicare pharmacy benefit and a likely focal point for this fall's presidential election battle.

At issue is whether the drug cards, which become available June 1, will offer discounts large enough to entice a critical mass of Medicare beneficiaries and persuade voters that the Bush administration's market-oriented approach to Medicare will help poor seniors as well as fatten drug company profits.

The new discount program was assessed here yesterday at a gathering of health care industry leaders and citizen advocates who concluded that the cards might offer the poorest seniors a better deal than first thought but warned that the program could sink under the weight of its complications.

"When push comes to shove in November, the president wants everyone to have one of these little cards in their wallet, and he wants them to get substantial discounts," Dan Mendelson, president of Health Strategies Consultancy LLC, told the gathering.

The 103 corporate managers of private pharmacy benefits that have come forward to offer discount cards under the new federal program are more than double the 40 or 50 applicants that the Centers for Medicare and Medicaid Services and industry experts had expected. The companies want to be included, officials said, because it would enable them to participate in the larger, more lucrative Medicare pharmacy program in two years and allow them to gather valuable demographic information about Medicare recipients.

Broad competition

Leslie Norwalk, CMS' acting deputy director, said most applicants would be selected for the program later this month, guaranteeing competition for seniors' business in every region. It would also assure a shot at achieving hoped-for discounts of between 10 percent and 25 percent off prices for name-brand drugs and 50 percent off generics that uninsured seniors now pay at retail pharmacies.

At least half of the more than 40 million Medicare beneficiaries have little or no drug coverage. The Medicare reform law, which President Bush signed in December, is designed to fix that. But the program's drug benefit has been controversial. Senior groups, for example, have criticized the benefit, under which Medicare will pay 75 percent of annual drug costs from $251 to $2,250, and then will stop payments until a beneficiary has spent $3,600 out of pocket.

Democrats and consumer groups, meanwhile, have assailed the Medicare law because it expressly prohibits the federal government from negotiating lower drug prices. Without an effort at controlling pharmaceutical prices, they maintain, the program's cost will soar out of control. The benefit's price tag -$400 billion over 10 years when Congress passed the measure - is now estimated by the Bush administration to be $534 billion.

But Republicans counter that price controls would hinder drug research and development. And Norwalk said the number of companies that want to offer discount drug cards show that cooperative ventures with private enterprises make good public policy.

"If it doesn't work for the industry, it's not going to work for beneficiaries," Norwalk said.

The discount card program, which ends when the new Medicare drug benefit takes effect in January 2006, was designed to provide a bridge to the Medicare program for the neediest seniors who pay the most for medications.

Beyond the discount, the card program will provide a $600 subsidy for prescription medicines in both 2004 and 2005 for beneficiaries who are at or below 135 percent of the federal poverty level-or $12,569 for a single person in 2003 and $16,862 for a married couple. Those seniors who qualify will also not have to pay the program's $30 annual enrollment fee.

Medicare managers are hoping to enroll at least 7.3 million seniors for the discount program, including 4.7 million low-income people who would qualify for subsidies.

Reaching the needy

The complication is going to be reaching those neediest beneficiaries, who tend to be less educated and have limited access to information about such a complicated program.

"This is a very difficult population to reach," Mendelson said, citing struggles of states to recruit poor people to their drug benefit programs.

Recent polling by the Kaiser Family Foundation points to how difficult it might be to promote the benefit program in a short time.

Despite intense media coverage of Congress' debate on the Medicare reform bill, only 32 percent of people age 65 or older were aware of the drug benefit's passage, said Patricia Neuman, director of the foundation's Medicare Policy Project.

"We are at the beginning of a very steep learning curve," Neuman said.

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