CMS News

The Centers for Medicare & Medicaid Services (CMS) today issued the final regulation for drug discount cards endorsed by Medicare that will help people who are covered by Medicare buy their prescription drugs at lower costs and obtain other pharmacy services.

The final regulation establishing the Medicare-Endorsed Prescription Drug Card Assistance Initiative will be published in the Federal Register September 4, 2002.  CMS expects Medicare-endorsed discount card programs to begin operating as soon as possible.

“Seniors and people with disabilities shouldn’t be the only Americans paying the highest prices for prescription drugs.  We have an obligation to 40 million beneficiaries to help them find ways to purchase drugs more efficiently,” said CMS Administrator Tom Scully.  “President Bush, Secretary Thompson and I are committed to a comprehensive plan to modernize Medicare that includes prescription drug coverage, but until a Medicare prescription drug benefit is available, the discount card initiative should give them some needed relief.

“The new discount card initiative is an important step to give Medicare beneficiaries useful and greatly needed information about their choices and to help them learn how to buy prescription drugs at lower costs.  We believe that providing education to Medicare beneficiaries – particularly those without drug coverage – on ways to access more affordable prescription drugs will allow them to make better use of their Medicare-covered services.”

Under the Medicare-Endorsed Prescription Drug Card Assistance Initiative, CMS will only endorse card sponsors that secure rebates or discounts from drug manufacturers on brand name and/or generic drugs.  The initiative is expected to yield average overall savings of 10 to 13 percent, possibly up to 15 percent – and as much as 25 percent or more on individual drugs – and will provide beneficiaries with needed assistance with prescription drug costs.  These savings must be shared with enrollees, either directly or indirectly through pharmacies as lower prices or pharmacy services.  The initiative will promote the use of generic drugs by educating beneficiaries about generic drugs and providing information on generic alternatives.  

In response to comments received during the public comment period, the final regulation differs from the proposed regulation published on March 6, 2002 in many important respects:

• Enhances the information on drug prices, including information about generic alternatives, and other endorsed card program features that beneficiaries will receive through the card sponsors’ consortium web site and on http://www.medicare.gov/ and through 1-800-MEDICARE (800-633-4227). 
• As a condition of endorsement, requires card sponsors to secure manufacturer rebates or discounts on brand name and/or generic drugs.
• As a condition of endorsement, requires that plans must provide improved access to retail pharmacies, in both urban and rural areas.
• Provides new opportunities for pharmacy organizations and others to offer a Medicare-endorsed card program by changing the qualifying criteria related to experience and organizational capacity.  
• Allows card sponsors to offer two program designs, thus giving beneficiaries more choice.
• Gives endorsements only to programs that ensure that beneficiaries have access to stable formularies and prices. Card sponsors will not be able to increase drug prices or remove drugs from the approved list for the card program for periods of at least 60 days, beginning on the first day of the program’s operation.
• As a condition of endorsement, gives beneficiaries improved privacy protection, as endorsed cards will have to align their privacy protections for beneficiaries’ protected health information with  privacy standards under the Health Insurance Portability and Accountability Act (HIPAA), including final changes in the recently announced update of those privacy standards.  

In his 2003 budget proposal, President Bush repeated his call for a strengthened and improved Medicare program with better coverage options for seniors, including prescription drug coverage.  He also announced three short-term prescription drug initiatives as part of his efforts to improve Medicare benefits.  These include the Medicaid 'model waiver' program, Pharmacy Plus, to help states use their Medicaid programs to provide prescription drug coverage to certain low-income beneficiaries; the Medicare Low-Income Drug Assistance proposal that, if enacted, would quickly phase in comprehensive drug coverage for Medicare beneficiaries up to 150 percent of poverty; and the Medicare-endorsed drug card initiative, which will give seniors access to drug discounts from manufacturers using the best features of private drug benefits.  Recently, HHS approved Medicaid waivers that will implement prescription drug programs for seniors in Florida, South Carolina and Maryland.  Previously, HHS had approved waiver programs for Illinois and Wisconsin.

CMS will continue to work with Congress in a bipartisan effort to reform and strengthen Medicare, including a full prescription drug benefit for all seniors and disabled beneficiaries.