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U.S. law threatens discount drug card
By SARA FRITZ, Times Washington Bureau Chief WASHINGTON -- The Bush administration is threatening to sabotage the pharmaceutical industry's new voluntary program of prescription drug discounts for seniors. At stake is the future of the popular Together RX discount card sponsored by seven major drug companies that offers savings of up to 40 percent. The card became available in June when it became apparent that Congress was unlikely to enact a drug benefit for Medicare patients this year. With nearly 300,000 seniors already using the Together RX card, Tom Scully, head of the government's Centers for Medicare and Medicaid Services, has told drug companies that federal law prohibits them from offering discounts in excess of 10 percent to Medicare patients unless they make the same low price available to the government's Medicaid program. In response to Scully's warning, two drug manufacturers, Bristol-Myers Squibb Co. and GlaxoSmithKline, said Wednesday that they have been forced to raise their prices for Together RX cardholders, effective immediately, at least until the dispute is resolved. "Seniors without prescription drug coverage are being penalized because the government wants the same price," said Rob Hutchison, spokesman for Bristol. Mary Ann Rhyne, spokeswoman for GlaxoSmithKline, said it would be "prohibitively expensive" for her company to provide a substantial discount to Medicare patients if it also had to offer the same prices for Medicaid. "We wanted to be part of the solution," Rhyne said. "This was intended to be a temporary stop-gap until the government created a prescription drug program for seniors. These are people who have fallen through the cracks; there is no program for them." Scully declined to comment on the controversy, but a spokesman acknowledged that the CMS administrator had issued the controversial interpretation. Drug company officials were scheduled to meet today with top CMS officials to discuss the dispute. Under the Medicaid program, which provides health care to poor people of all ages, the drug companies are required to offer the government their "best price." Scully, in a June 24 memo obtained by the St. Petersburg Times, noted that the Together RX cardholders are now paying less than the Medicaid program and that this is against the law. If Scully does not change his mind, industry analysts say, the drug companies would have to choose between ending their deep discounts for Medicare patients or losing hundreds of millions of dollars in revenue from Medicaid sales. Like Bristol and Glaxo, the other five companies are not expected to choose to lose more money. At its core, this dispute is an outgrowth of the drug industry's much-criticized policy of charging widely differing prices to different customers and keeping those prices secret. But it also is a result of the failure of Congress to enact a prescription drug benefit for seniors, despite repeated promises by both Democrats and Republicans. The irony is that Scully's boss, Health and Human Services Secretary Tommy Thompson, has often praised the drug manufacturers for their willingness to offer discount cards to seniors. President Bush promised more than a year ago that his administration would offer its own discount card, but the program was never implemented because of a court challenge filed by drugstore owners. Unlike the president's proposed card, Together RX has the support of the drugstores, which are cooperating with the program. It is estimated that 11-million seniors without prescription drug coverage are eligible for the Together RX card. To be eligible, an applicant's income cannot exceed $28,000 for a single person and $38,000 for a couple. In addition to Together RX, most of the drug companies offer their own discount card. Glaxo-SmithKline's "Orange Card," for example, has about 100,000 subscribers and offers the same savings on Glaxo products as Together RX. According to the company, the prices on this card also have been raised in response to Scully's legal opinion. What makes the Together RX card more popular than the single-company cards is that it covers about 150 drugs that are most often used by Medicare patients. Among the most popular drugs covered by the card are Pravachol and Glucophage, manufactured by Bristol, and Avandia and Serevent from Glaxo. Hutchison said the Together RX card has saved seniors an estimated $6.4-million on prescription drugs since it started in June. Discounts through the card vary, depending on the drugstore filling the prescription. Rhyne said seniors will continue to realize savings of as much as 25 percent on Glaxo drugs, even though the company was forced to trim its discounts. Hutchison said his company will continue to work with government officials in an attempt to iron out this problem. The other companies participating in the card are Abbott Laboratories, AstraZeneca, Aventis, Johnson & Johnson and Novartis. Applications for the Together RX card and a list of drugs covered by the card are available on the program's Web site, www.together-rx.com.
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