CMS Taking Applications for Drug Discount Programs

January 13, 2003
The Centers for Medicare & Medicaid Services (CMS) has started taking applications from companies interested in offering prescription drug discount cards to Medicare beneficiaries. CMS took the action despite a lawsuit questioning whether it has the authority to proceed without Congressional approval.

“Seniors and people with disabilities shouldn’t be the only Americans paying the highest prices for prescription drugs. We have an obligation to 40 million beneficiaries to help them find ways to purchase drugs more efficiently,” said CMS Administrator Tom Scully. “President Bush, Secretary Thompson and I are committed to a comprehensive plan to modernize Medicare that includes prescription drug coverage, but until a Medicare prescription drug benefit is available, the discount card initiative should give them some needed relief."

CMS proposed the regulation authorizing the program in March 2002. After a public comment period, the Bush administration issued a final regulation in September 2002.

Under the program, seniors would pay up to $25 for a drug discount card that would entitle them to savings of 10 percent to 13 percent on prescriptions. It's anticipated that multiple cards will be available and beneficiaries will be encouraged to select the ones that provide the discounts that will be most beneficial to them.

“The new discount card initiative is an important step to give Medicare beneficiaries useful and greatly needed information about their choices and to help them learn how to buy prescription drugs at lower costs. We believe that providing education to Medicare beneficiaries – particularly those without drug coverage – on ways to access more affordable prescription drugs will allow them to make better use of their Medicare-covered services, Scully said.”

To receive CMS authorization to issue a discount card, providers will need to guarantee discounts on at least one drug in 119 medical categories. They will need to post drug prices on the Internet, enabling consumers to find the best price on each drug.

The plan is being challenged by the National Association of Chain Drug Stores and the National Community Pharmacists Association, charging that the plan is unconstitutional. A federal judge in September 2001 ruled that HHS lacked the constitutional authority to implement the program.