Rx discount cards will hurt pharmacies, CMS chief admits

January 7, 2002

CMS chief says President Bush will go ahead with prescription discount card, even if it hurts pharmacies

 

GOVERNMENT and LAW

Rx discount cards will hurt pharmacies, CMS chief admits

Tom Scully won't deny it: When drug costs shift, people get hurt. And he is perfectly candid about who gets hurt if President George W. Bush's proposed prescription discount card for seniors becomes a reality. Chain and community pharmacies will take a blow, as will drug companies.

But not everyone gets clobbered—pharmacy benefit managers will capture more business. So be it, declared, in essence, the administrator of the Centers for Medicare and Medicaid Services (CMS) in an address at a Pharmaceutical Care Management Association meeting in Washington, D.C., last month.

"I don't blame pharmacists for being upset," said Scully. "They make their best margins on uninsured seniors who walk in the door. If I were Craig Fuller [CEO of the National Association of Chain Drug Stores], I'd probably do everything I could to slow this thing down, but our job is to get discounts to seniors."

Discount cards as proposed by the President promise 10%-25% off retail drug prices. At present, the injunction that NACDS and the National Community Pharmacists Association won on Sept. 6 against the cards remains in force. But meantime, within days Scully expects to publish in the Federal Register proposed regulations for the cards. He will then invite public comment.

Scully would like to see Congress pass a Medicare drug benefit for seniors, and he sees discount cards as a "momentum builder" toward that goal. He hopes discount cards will shepherd seniors into large purchasing pools, where their bargaining power will bring them lower prices. To do this without creating a new federal bureaucracy, the forthcoming regulations will encourage seniors to join what Scully called voluntary cooperatives, often affiliated with PBMs. Members would receive Medicare-endorsed discount cards good in chain, community, or mail-order pharmacies. CMS oversight of the cooperatives would be "loose," as long as things turn out as planned.

Not everything will go the PBMs' way, Scully maintained. They cannot issue discount cards that are mail order only, and they must regularly publish their drug prices. Scully predicted that comparative price publishing would bring major changes in seniors' buying behavior.

He acknowledged concern about the impact of prescription discount cards on rural pharmacies, which are afraid the cards will lure customers away to superstores like Wal-Mart. That is "a legitimate gripe," Scully said, and "something we must deal with," although he did not suggest how. As for chain pharmacies' fears of losing business to mail order, market-share shifts will be minor, he believes, because people will not give up the convenience of driving to a nearby pharmacy to fill a prescription.

Scully pronounced himself "stunned" to read allegations that CMS proposed discount cards in collusion with PBMs, and he denied any secret agreements. It is not that he is against pharmacies and for PBMs, he insisted. It is that he is for seniors. "I haven't seen anyone telling me seniors aren't paying too much for drugs."

Thomas Hollon, Ph.D.

The author is a writer in the Washington, D.C., area.
 



Tom Hollon. Rx discount cards will hurt pharmacies, CMS chief admits.

Drug Topics

2002;1:30.