Medicare Compliance & Reimbursement

But will the cards save seniors enough money?

With the Web site for the program live as of April 29, Medicare officials are touting the discounts they say will be available to seniors through the new Medicare-endorsed prescription drug cards.
 
But the data available so far suggests that, on some drugs at least, seniors can get prices that are as good or better through existing Internet pharmacies. Moreover, significantly better deals are available through Canadian sites.

As of the 29th, about half of the 40 national and 32 regional cards had pricing information on the Medicare.gov Web site. During a conference call with reporters, Department of Health and Human Services Secretary Tommy Thompson said that, based on the data available so far, discounts were averaging 17 percent on brand-name drugs and 30 percent on generics, with greater savings available for mail-order drugs.

These numbers refer to discounts off of the "average wholesale price," an industry reference price that has been criticized as bearing little relation to what purchasers actually pay. Centers for Medicare & Medicaid Services Administrator Mark McClellan said CMS is working on comparing the drug-card prices to retail costs but does not yet have the information.

McClellan did say, however, that "what we're seeing, for some of the better cards, are significant price reductions off the typical retail price that seniors pay for their drugs, and in many cases the prices available on the card are lower than the average prices charged to all Americans, including Americans with both public and private health coverage."

However, Rep. Henry Waxman (D-CA) has released an analysis suggesting that in many cases discounts offered by the Medicare cards are no better than prices already available to seniors.

According to the analysis, authored by the Democratic staff at the House Government Reform Committee, a three-month mail-order supply of the ten best-selling drugs for seniors would cost $2,664 using the Medicare discount card sponsored by the pharmacy benefit manager affiliated with the pharmacy chain Walgreen's, $2,850 using the ExpressScripts' Pharmacy Care Alliance Card, and $2,889 with the RxSavings Card sponsored by Medco. The same selection of drugs could be purchased through the Internet pharmacy Drugstore.com for $2,771, without the annual fee of up to $30 that Medicare card sponsors may charge.

Other analyses turned up similar results. For example, "the best Medicare mail order prices for three best-selling drugs -- the arthritis drug Celebrex, the osteoporosis drug Fosamax, and cholesterol-lowering Lipitor -- were at least a third higher than prices at the three Canadian pharmacies listed on the state of Wisconsin's online prescription drug resource center," the Associated Press reported.

McClellan: Card Sponsors Have Not Yet Begun To Fight

Asked about these sorts of findings during the conference call, McClellan pointed out that Internet pharmacies offer drugs only by mail order, while the Medicare cards offer seniors the choice of going to local pharmacies. And he reiterated his oft-voiced concern that the safety of drugs bought through Canada can not be guaranteed.

Moreover, Thompson and McClellan predicted that some cards which have not yet posted pricing data would try to beat prices already posted, creating a cycle of competition leading to greater discounts than seen so far. "Price competition is just starting," McClellan said.

Although seniors can sign up for the cards starting May 3, both the Secretary and McClellan said seniors should gather information but feel no pressure to choose a card right away. Seniors who have chosen a a card by June 1 can start using it on that date, but there is no deadline for signing up.

For low-income Medicare beneficiaries, the discount cards are an unambiguously good deal. Seniors with incomes below the poverty level qualify for a $600 subsidy when they sign up for a Medicare-endorsed card and are exempt from enrollment fees. Moreover, several drug companies have agreed to provide their drugs free to these beneficiaries even after they exhaust the $600.