Bush to Announce Pharmacy Discount
The Associated Press
July 11, 2001
by Ron Fournier
"The plan relies on companies that manage drug benefits to buy prescription drugs in bulk. The companies would sell the cards to Medicare patients, who could use them at any pharmacy to purchase their medicine at a reduced rate."
Ari Fleischer, White House spokesperson:
"The president is committed to helping seniors get prescription drugs they need and deserve."
Comment: The reality:
** The fact that this plan "does not require congressional approval" confirms that this is not a government program. It is merely a private, marketplace scheme that is receiving the personal endorsement of President Bush.
** The plan will "not require federal money." Without use of federal funds, the plan totally depends on the charity of the marketplace to reduce prescription drug costs, a principle based on a law of economics that does not exist.
** The program will be administered by pharmacy benefit managers (PBMs), the prescription drug equivalent of managed care plans. These middleman businesses siphon off health care dollars that should be directed to patient care.
** The PBMs will sell memberships to Medicare beneficiaries. Paying a fee for a "discount" card further strains the budgets of lower income beneficiaries. The Medicare card could be used to establish eligibility for the "discount," without adding further administrative burdens and fees.
** Providing everyone with a "discount" is no discount at all. It is merely a price that is below an artificially inflated price created for the purpose creating a fraudulent "discount" price.
** Bulk purchasing is not unique to PBMs, but is characteristic of the industry. Only patients using the services of the small retailer pay inflated prices since those retailers are not allowed bulk rates. This is yet another example of unfair price discrimination characteristic of this industry.
** Many pharmacies are dependent on the PBM contracts. The PBMs are in a position to force the retailers, contractually, to honor the discount cards, while requiring them to accept the burden of the discounts, threatening the solvency of the retailers.
** Beneficiaries are to have choice between at least two PBMs in each region. Competition didn't stop health care inflation under managed care plans; it won't work for PBMs either.
"Discount" cards are a marketing scheme that have no beneficial impact on true costs. In fact, the administrative burden of these programs actually result in a modest increase in overall costs. Medicare beneficiaries need prescription drug coverage, and they need relief from ever-increasing out-of-pocket expenses that are impairing access to care. If Mr. Bush really wants to help seniors "get prescription drugs they need and deserve," then he would support a bona fide Medicare prescription benefit that minimizes beneficiary cost sharing. Sadly, not even the leading congressional proposals would accomplish this goal.
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