Federal Court Blocks Bush’s Pharmacy Discount Card Plan for Seniors, Saying Program May Need Congressional Approval

A federal court on Sept. 6 temporarily delayed the implementation of President Bush's plan to offer prescription drug discount cards to Medicare beneficiaries, ruling that the White House may have "lacked the authority" to establish the program without congressional approval, the Washington Post reports (Goldstein, Washington Post, 9/7). Under the plan, which was slated to begin in January, pharmacy benefit managers would negotiate discounts with drug manufacturers and pharmacies and then sell cards to Medicare beneficiaries for up to $25, allowing them to purchase pharmaceuticals at a 15% to 20% discount (Kaiser Daily Health Policy Report, 7/13). The National Association of Chain Drug Stores and the National Community Pharmacists Association filed suit in July to block implementation of the plan, arguing that the administration lacks the "authority" to implement the plan without congressional approval and violated federal rules by drafting the plan without open meetings or a public comment period (Kaiser Daily Health Policy Report, 7/18). The pharmacy groups say the plan would offer seniors only "relatively small" savings and failed to allow public participation "required in drafting regulations." In his ruling, Judge Paul Friedman of U.S. District Court in the District of Columbia issued a temporary injunction against the plan, adding that the pharmacy groups have a "substantial likelihood of success" in winning their case. The injunction, which has no set time limit, "essentially blocked" the pharmacy discount plan on an "emergency basis."

The Details
In the case, Justice Department attorneys argued that HHS had "proper legal authority" to implement the program without congressional approval, saying that Congress had "given authority for the program when it gave the department broad latitude to run patient education programs" (Washington Post, 9/7). They said that the program serves only to "educate" Medicare beneficiaries about the discount cards (Lueck, Wall Street Journal, 9/7). However, Friedman said that the plan amounted to "creating a whole new program," adding, "This is far more than an educational or advisory service" (Fulton, CongressDaily/AM, 9/7). Justice Department attorneys also "sought to rebut" allegations that HHS should have opened the plan to public comment, arguing that HHS would "not actually" regulate the program (Washington Post, 9/7). In his decision, Friedman rejected that argument, ruling that the plan represented a "substantive rule and a substantive program that the public at large should have been invited to comment on" (CongressDaily/AM, 9/7).

Reaction
A "disappointed" Centers for Medicare and Medicaid Services Administrator Thomas Scully said that the agency plans to "consider all legal options" for responding to the injunction (Wall Street Journal, 9/7). "Our goal remains to provide discounts to millions of seniors as soon as possible," he said. Although the injunction "does not guarantee an end" to the plan, HHS and White House officials acknowledged that the ruling will delay the program for months. "We are pleased that the process has been stopped," Craig Fuller, president of the National Association of Chain Drug Stores said, adding, "We believe we'd bear an undue burden for this program" (Washington Post, 9/7). CongressDaily/AM reports that the injunction may "increase the pressure" on Congress to add a prescription drug benefit to Medicare (CongressDaily/AM, 9/7).