How Prescription Drug Law Works

It was distressing to read that Rep. James Moran thinks that the new Medicare Drug Discount Cards will be of little value to seniors. Recent studies showing the full value of the program to seniors contradict that view. For example:



  • The Business Roundtable (BRT) did a state-by-state analysis and found that 2,168 seniors in Rep. Moran’s 8th congressional district are eligible for the $600 cash subsidy, and another 63,921 could benefit from drug discount card savings. The BRT estimates that the total benefit to seniors in Mr. Moran’s district in 2004 and 2005 could be $8.3 million.

  • A study by the Centers for Medicare and Medicaid Services found potential savings of 10 to 17% on drugs for all seniors and savings of 32 to 85% for low-income seniors who sign up for the discount card program.

  • A study by the Lewin Group, a Fairfax-based economic consulting firm, shows that, on average, seniors save just above 20%, and low-income seniors could save between 29 and 92% on their medications.

  • A study by the American Enterprise Institute found that low-income seniors can save between 53 and 78% on their drugs if they take full advantage of the program.


There are three ways seniors can save with the program: 1) All seniors can receive discount prices on their drugs that are negotiated by the private drug card plan they select; 2) Seniors below 135% of poverty are eligible for a $600 government subsidy on their cards both this year and next; and 3) Major pharmaceutical companies offer special programs to boost the value of the discount cards so low- and moderate-income seniors can purchase their drugs for as little as $12 to $15 a month, with some offering their drugs free to low-income seniors. Together, these programs work together to supercharge the benefit and provide the most help to those who need it most.


Medicare administrator Mark McClellan testified recently before Congress that only about 15% of those who are eligible for the $600 assistance program are signed up.


Many seniors are in need, and this program could help them. When Congress passed the discount drug card program, it did so to provide immediate help to low income seniors who don’t have Medicaid or other drug coverage. Those who don’t sign up for this new program are leaving hundreds and possibly thousands of dollars on the table that they surely need to buy their medications.


Even seniors who don’t qualify for the full subsidy may find generous savings on their drug bills, especially if they don?t have Medigap or retiree drug coverage. AEI found that moderate and higher-income seniors who don?t have drug coverage likely will find that the Medicare drug cards offer them the best deals as well, with savings of up to 24%. AEI found that prices available on June 1 through the cards were 5 to 50% lower than prices offered by well-known discounters.


There has been a great deal of criticism that the program is too complex and that the drug companies have raised their prices to make the discounts meaningless. Medicare has made many changes to streamline the enrollment process, boosting the number of operators taking calls to 3,000 and simplifying website enrollment. Regarding prices, data compiled by the U.S. Bureau of Labor Statistics shows that from November 2003 to March 2004, prescription drug inflation for all drugs was just 1.5 percent.


Even through the criticism, about four million seniors have enrolled in the discount card program, and 125,000 more are signing up for cards every week. Seniors can find out for themselves if they qualify for the savings by calling 1-800-Medicare or visiting www.medicare.gov.


Grace-Marie Turner

President

Galen Institute

P.O. Box 19080

Alexandria, VA 22320

(703) 299-8900

Fax (703) 299-0721

gracemarie@galen.org

www.galen.org


Grace-Marie Turner is president of the Galen Institute, a not-for-profit public policy research organization based in Alexandria that specializes in health reform issues.

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It was distressing to read that Rep. James Moran thinks that the new Medicare Drug Discount Cards will be of little value to seniors. Recent studies showing the full value of the program to seniors contradict that view. For example:



  • The Business Roundtable (BRT) did a state-by-state analysis and found that 2,168 seniors in Rep. Moran’s 8th congressional district are eligible for the $600 cash subsidy, and another 63,921 could benefit from drug discount card savings. The BRT estimates that the total benefit to seniors in Mr. Moran’s district in 2004 and 2005 could be $8.3 million.

  • A study by the Centers for Medicare and Medicaid Services found potential savings of 10 to 17% on drugs for all seniors and savings of 32 to 85% for low-income seniors who sign up for the discount card program.

  • A study by the Lewin Group, a Fairfax-based economic consulting firm, shows that, on average, seniors save just above 20%, and low-income seniors could save between 29 and 92% on their medications.

  • A study by the American Enterprise Institute found that low-income seniors can save between 53 and 78% on their drugs if they take full advantage of the program.


There are three ways seniors can save with the program: 1) All seniors can receive discount prices on their drugs that are negotiated by the private drug card plan they select; 2) Seniors below 135% of poverty are eligible for a $600 government subsidy on their cards both this year and next; and 3) Major pharmaceutical companies offer special programs to boost the value of the discount cards so low- and moderate-income seniors can purchase their drugs for as little as $12 to $15 a month, with some offering their drugs free to low-income seniors. Together, these programs work together to supercharge the benefit and provide the most help to those who need it most.


Medicare administrator Mark McClellan testified recently before Congress that only about 15% of those who are eligible for the $600 assistance program are signed up.


Many seniors are in need, and this program could help them. When Congress passed the discount drug card program, it did so to provide immediate help to low income seniors who don’t have Medicaid or other drug coverage. Those who don’t sign up for this new program are leaving hundreds and possibly thousands of dollars on the table that they surely need to buy their medications.


Even seniors who don’t qualify for the full subsidy may find generous savings on their drug bills, especially if they don?t have Medigap or retiree drug coverage. AEI found that moderate and higher-income seniors who don?t have drug coverage likely will find that the Medicare drug cards offer them the best deals as well, with savings of up to 24%. AEI found that prices available on June 1 through the cards were 5 to 50% lower than prices offered by well-known discounters.


There has been a great deal of criticism that the program is too complex and that the drug companies have raised their prices to make the discounts meaningless. Medicare has made many changes to streamline the enrollment process, boosting the number of operators taking calls to 3,000 and simplifying website enrollment. Regarding prices, data compiled by the U.S. Bureau of Labor Statistics shows that from November 2003 to March 2004, prescription drug inflation for all drugs was just 1.5 percent.


Even through the criticism, about four million seniors have enrolled in the discount card program, and 125,000 more are signing up for cards every week. Seniors can find out for themselves if they qualify for the savings by calling 1-800-Medicare or visiting www.medicare.gov.


Grace-Marie Turner

President

Galen Institute

P.O. Box 19080

Alexandria, VA 22320

(703) 299-8900

Fax (703) 299-0721

gracemarie@galen.org

www.galen.org


Grace-Marie Turner is president of the Galen Institute, a not-for-profit public policy research organization based in Alexandria that specializes in health reform issues.

SHARE THIS ARTICLE

About the author