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GOVERNMENT & MEDICINE
Drug card plan raises concerns about hurting pharmacies
Lawmakers are focusing on Medicare Rx deals involving manufacturers and pharmacy benefit managers, but pharmacists worry they'll pay the price.
By Markian Hawryluk, AMNews staff. Nov. 12, 2001. Additional information
Washington -- Proponents of a Medicare drug benefit are keeping an eye on the debate over President Bush's proposed prescription discount cards because both measures face similar hurdles.
After a legal setback delayed introduction of the cards, Medicare officials are now looking to Congress to grant them the authority to proceed with the plan. Opponents of the proposal, however, say the drug cards will provide limited relief to seniors and will hurt local pharmacies.
At issue is the source of the discount. While the drug cards are intended to provide savings through bulk purchasing, pharmacy owners are concerned the discounts will be taken out of their profits.
At a recent hearing of the House Small Business Committee, Gary Sims, owner of four West Virginia pharmacies, said his state introduced the Golden Mountaineer discount card with great fanfare, but in the end, the pharmacy benefits manager running the program profited at the expense of the local pharmacies.
"Because my cost to buy the drug is still the same, I am receiving no reduction in the cost," Sims said. "In fact, it costs me more to fill the prescription because I now must submit an electronic claim to the PBM and I must pay a fee for every prescription that is filled."
Rep. Nancy Johnson (R, Conn.), chair of the House Ways and Means health subcommittee, said she would like to see a bill allowing the Centers for Medicare & Medicaid Services to introduce the cards, but she also wants protections for pharmacies.
"If you were going to authorize that legislatively, you'd also have to include in that authorization some description of the system so that the pharmacists know that they're going to be able to deliver the product at the price that the PBMs propose," Johnson said. "And frankly, I haven't figured that out yet."
Sen. Bill Frist, MD (R, Tenn.), said he plans to introduce a Medicare discount card bill in the Senate.
CMS Administrator Tom Scully said the agency is still committed to implementing its plan, and that it will protect local pharmacies. "Our goal is to get the discounts out of the drug manufacturers, not the pharmacists."
CMS has appealed the court ruling that barred introduction of the discount cards and has indicated it is prepared to go through a rulemaking process to establish the program.
One model CMS might look at is the Glaxo SmithKline Orange Card. The card, which is not endorsed by CMS, will offer low-income seniors discounts on GSK products.
Robert Ingram, GSK chief operating officer and president, said seniors will pay a discounted price. A PBM will rebate the difference to the pharmacy and GSK will reimburse the PBM.
But according to the National Assn. of Chain Drug Stores, even that may not be enough to protect pharmacies.
"Even if these rebates were passed along, pharmacies would have to float the money for the PBM, and wait for payment, which could take several weeks or months, if collected at all," NACDS said in a prepared statement. "Low-margin retail pharmacies are not in a position to serve as a 'bank' for PBMs."
There is still a chance Congress could authorize the Medicare discount cards before it wraps up the current session, laying the groundwork for a tough debate over a full-fledged Medicare outpatient prescription benefit. That benefit would likely rely on the same type of bulk-purchasing discounts to offset its high cost.
"It's a core building block to anybody's bill," Scully said. "President Bush is committed to a prescription drug benefit. The problem is we're going to have to wait until next year."
ADDITIONAL INFORMATION:
Weblink
Testimony from House Committee on Small Business hearing "Medicare Endorsed Prescription Drug Cards and Their Impact on Small Business" (http://www.house.gov/smbiz/hearings/107th/2001/011025/)
Copyright 2001 American Medical Association. All rights reserved.