Bush Plan Would Offer Pharmacy Discount Cards to All Medicare Patients

The White House is expected to unveil a plan on Thursday that would provide pharmacy discount cards to Medicare beneficiaries by the beginning of next year, the Washington Post reports. The "new strategy" is designed to provide seniors with "quick help" with rising prescription drug costs (Goldstein, Washington Post, 7/11). The proposal represents an "interim step" on the way to broad Medicare reforms, including a prescription drug benefit, the New York Times reports. President Bush is also expected announce Thursday "detailed" guidelines for Medicare reform (Pear, New York Times, 7/11). Under the pharmacy discount plan, pharmacy benefits managers that negotiate discounts with drug manufacturers and pharmacies would sell cards to Medicare beneficiaries, allowing them to purchase pharmaceuticals at a discount (Washington Post, 7/11). Although the Bush administration has not released a detailed proposal, the Wall Street Journal reports that companies issuing the cards would likely have to publish prices in order to allow seniors to "shop around for the best deal," with discounts ranging from 10% to 40% (Wall Street Journal, 7/11). The plan would not likely require federal funding (Washington Post, 7/11). White House officials "are still trying to work out precisely how" the government could encourage Medicare beneficiaries to enroll in the program (New York Times, 7/11). Bush, hoping to "bolster the affordability" of medicine for seniors and address a "health care issue of acute public concern," could likely implement the program without congressional approval. The plan would allow the White House to "position itself as taking the lead" on the prescription drug issue, regardless of whether Congress passes a drug benefit, the Post reports.

Opposition
The pharmacy discount proposal would "fall short" of a broader Medicare prescription drug benefit favored by most Democrats (Washington Post, 7/11). While Democrats may "balk" at the plan, the Wall Street Journal reports that "it could be difficult for them to protest too loudly" in the face of "huge pressure" from seniors to reduce drug costs (Wall Street Journal, 7/11). Many drug stores and pharmacists "adamantly oppose" the program. Craig Fuller, president of the National Association of Chain Drug Stores, which is urging Bush to "drop" the plan, said that the proposal would "unfairly" place a "burden ... on the backs of retail pharmacies." He added that the plan would require drugstores to lower their prices even though the wholesale prices that manufacturers charge -- typically 70% of the retail price -- might not be affected. Pharmacy benefits managers warn that the pharmacy discount cards do not represent insurance or a "substitute" for a drug benefit. However, Rep. Nancy Johnson (R-Conn.) said that the proposal "made sense" and would "give seniors immediate relief" (New York Times, 7/11).

Bush
In announcing the pharmacy discount plan, Bush will step "more firmly" into the Medicare debate, with Congress set to address legislation to "modernize" the program and add a prescription drug benefit (Washington Post, 7/11). Government officials said that Bush hopes to "seize the initiative" and "shape" the debate in Congress, adding that the president would support a drug benefit in Medicare only as part of a "comprehensive" reform package. Bush favors a number of additional principles for Medicare reform, including:

• Allowing the private sector to have a "major role" in providing drug benefits and managing drug costs, with the federal government still providing "substantial subsidies" for beneficiaries;
• Permitting seniors to choose companies that would manage their pharmacy benefits, with at least two pharmacy benefit managers in every region;
• Establishing an "overall limit" on out-of-pocket drug costs for Medicare beneficiaries;
• Allowing seniors to remain in traditional Medicare; and
• Requiring the government to pay HMOs to cover the cost of drug benefits and urging Congress to pass legislation that would "reverse the exodus" of HMOs from Medicare.

Democrats' View
Democrats said that while they are open to "modest" reforms, "they will not accept changes" that place "financial pressure" on seniors to shift into Medicare HMOs. In the Senate, Democrats "are now heavily focused" on adding a prescription drug benefit to Medicare (New York Times, 7/11). Senate Finance Committee Chair Max Baucus (D-Mont.) said that the panel plans to vote on a Medicare proposal this month, but aides have struggled to "weave together" a package. Senate staffers said that "it is unclear" whether the committee can resolve the differences between Democrats and Republicans before the August recess (Washington Post, 7/11).