Debate Rages Over Pharmaceutical Coverage for Seniors.

Seeking to make good on his promise to provide an interim pharmaceutical benefit for America's seniors, President George W. Bush recently outlined o new prescription drug proposal utilizing private pharmacy benefit managers (PBM). This new plan is designed to make prescription drugs more affordable by setting up a government-endorsed discount program. Here's an overview of the plan and a look to the future debate.

President George W. Bush scrapped his original "Helping Hand" concept and proposed to create a new government-endorsed pharmacy program in an effort to keep a campaign promise to provide a Medicare prescription drug benefit.

The "Helping Hand" concept ran into considerable resistance from members of both parties of Congress as well as several states since its original announcement this winter. The original concept proposed giving block grants to states to expand or create state-run pharmacy assistance programs.

States were concerned that the costs of these programs would exceed the budget and leave them with an unfunded federal mandate.

Recognizing this concept had little chance of congressional approval, the administration proposed a different program designed to help Medicare beneficiaries lower out-of-pocket costs.

The new program is modeled after similar programs in Iowa, New Hampshire, West Virginia, and Washington and consistent with initiatives available through several private pharmacy benefit managers (PBMs).

The program would be managed by the Centers for Medicare and Medicaid Services (CMS), formally known as the Health Care Financing Administration (HCFA).

Any PBM with five years of pharmacy benefit management experience in the United States and a series of other requirements is eligible to apply. [l]

Once approved, the PBM is required to enroll all Medicare beneficiaries who apply if they are not enrolled in another Medicare-endorsed drug discount program. The PBM must limit the program to Medicare enrollees and provide a discount on at least one brand name and/or generic drug in each therapeutic class.

The consumer receives a discount equal to the lower of the pharmacy's usual and customary charge or the discount price available through the program. Generally, this discount would range from 15 percent to 25 percent off the retail price.

Enrollees pay an annual fee of up to $25 and are allowed to change programs on a semiannual basis. To control costs, PBMs may set up mail order programs, use preferred pharmacies and set up prescription formularies. They are also authorized to set up call centers to manage consumer concerns. These programs may not supplant existing pharmaceutical coverage under any insurance product.

CMS plans to publicize the program widely and make drug pricing and formulary information available for seniors to make informed decisions about these programs.

The opposition

The administration doesn't believe it needs congressional approval to set up such a program, and directed the U.S. Department of Health and Human Services to implement it by the January 1, 2002.

Pharmacists oppose the plan, fearing that the discounts will be passed on to the pharmacies or the consumer in price hikes in other areas. The National Community Pharmacists Association and the National Association of Chain Drug Stores filed suit in U.S. District Court to stop the program.

They claim that the administration violated the Federal Administrative Procedures Act because it did not have public meetings on the program and worked with the PBMs before of crafting the regulations.

There will also be an additional burden on state regulators and law enforcement personnel who will have to watch out for imposters that attempt to benefit by selling fraudulent cards and taking advantage of unsuspecting beneficiaries. Covering the 24 percent of Medicare beneficiaries without pharmaceutical coverage is a task of immense proportions. This debate will continue.

Georges Benjamin, MD, FACP, is the Secretary of the Department of Health and Mental Hygiene in Baltimore, Md.

References

(1.) "Medicare Will Endorse Discount Programs, Giving Purchasing Power to Beneficiaries." Press release, HHS News, July 12, 2001.

(2.) "Medicare Outlines Drug card Plans; Pharmacy Organizations Criticize Proposal." Bureau of National Affairs, No. 133, A-33, July 12, 2001. Georges Benjamin, MD, FACP, is the Secretary of the Department of Health and Mental Hygiene in Baltimore, Md.