GlaxoSmithKline To Announce National Program Offering Drug Discounts of 25% for Seniors

Moving ahead of the federal government, GlaxoSmithKline on Oct. 3 will announce the creation of a new discount program that will allow low-income Medicare beneficiaries who lack drug coverage to purchase most of the company's medications at discounts upwards of 25%, the New York Times reports. Under the program, to begin Jan. 1, all Medicare beneficiaries, including disabled individuals, with annual incomes at or below 300% of the federal poverty level -- $26,000 for an individual or $35,000 for a couple -- will receive discounts on all GSK medications sold outside hospitals. These drugs include Avandia for diabetes, Paxil for depression and Flovent for asthma. The company said that 11 million people could qualify for the program. Participants would pay nothing for the orange-colored card and would show it at most pharmacies to receive the discounts (Petersen/Freudenheim, New York Times, 10/3). According to David Stout, GSK's president of U.S. pharmaceutical operations, the company will provide a 25% discount on the wholesale price of the medication; depending on pharmacy pricing, consumers will receive 25% to 40% discounts on what they would pay otherwise (Loyd, Philadelphia Inquirer, 10/3). GSK said it is also negotiating with pharmacies to provide an additional discount (New York Times, 10/3). The program will be administered by the pharmacy-benefit manager Express Scripts Inc. (Wall Street Journal, 10/3). Starting Nov. 1, those who are eligible for the Orange Card program can pick up an application in their doctor's office or call 1-888-672-6436. Applicants will have to provide their Medicare beneficiary number and their previous federal income-tax return (Philadelphia Inquirer, 10/3).

'Closing the Gap'
GSK officials said they were launching the program to assist seniors who cannot afford supplemental drug coverage and do not qualify for public coverage, such as Medicaid, which does not pay for prescription drugs. GSK CEO Jean Pierre Garnier said that the program would also serve as a stopgap until Congress passes a comprehensive Medicare drug benefit. "It is a shame some patients can't get the full benefits of our drugs for economic reasons. We are trying to close the gap," he said. The Times reports that the discount program may also give GSK a competitive advantage over other pharmaceutical companies that market similar drugs. It is unclear whether other drug makers will offer similar programs -- Pfizer said it "would watch what happened" with GSK, while Bristol-Myers Squibb said it was "considering adding new discount programs to some of the more limited plans it already offered" (New York Times, 10/3). John Rother, policy director for AARP, said the Orange Card program "would have a lot more impact if other manufacturers follow suit" (Ranii, Raleigh News & Observer, 10/3). Garnier said, "I do believe some companies will follow us."

HHS Support
GSK's announcement follows an attempt by the Bush administration earlier this year to launch a drug discount card program (New York Times, 10/3). Under the plan, 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 proposal, however, was blocked by a federal judge in September after pharmacy groups said that they would bear the burden of the discounts (Las Vegas Sun, 10/3). The judge issued a temporary injunction, ruling that the administration may have lacked the authority to implement the plan without congressional approval (Kaiser Daily Health Policy Report, 9/7). HHS spokesperson Bill Pierce said on Oct. 2 that the administration "is not endorsing" GSK's costs for seniors. "Obviously they are doing something like the government wanted to do before the lawsuit," he said (Las Vegas Sun, 10/3). HHS Secretary Tommy Thompson will appear with GSK officials at an Oct. 3 press conference in Washington announcing the launch of the program (Philadelphia Inquirer, 10/3).

Will it Matter?
While many health advocates "welcomed" the discount program, they also said that its effect on low-income beneficiaries might be limited. Examining a pharmacy in upstate New York, where drugstores "have to contend with low-priced competition from Canada," the Times found that the GSK discount would reduce the price of a 30-day supply of Avandia from $152 to $114. That figure is roughly 5% of the maximum monthly income that an individual could make to qualify for the orange card -- and many seniors "need to take several drugs every day." Moreover, only 6% of all prescriptions recommended by doctors to seniors last year were for GSK drugs, according to IMS Health, which tracks the pharmaceutical market. Families USA Executive Director Ron Pollack said, "This is as much of a public relations effort on the part of Glaxo as anything. The number of people who will get relief is likely to be very small." And Ira Loss, a health care researcher at the financial research firm Washington Analysis said, "The real impact is a question mark. The target population for these drugs cannot pay for them at 100% or at 75%" of the retail price (New York Times, 10/3).