Federal court blocks President Bush’s prescription discount plan

Decision could derail program for months — or for good

Pharmacy groups received an unexpected gift from a federal court on Sept. 7 — a judge issued an injunction blocking President George W. Bush’s plan to offer prescription drug discount cards to senior Americans.

In July, the National Association of Chain Drug Stores and the National Community Pharmacists Association, both in Alexandria, VA, filed suit against Secretary of Health and Human Services (HHS) Tommy Thompson and Centers for Medicare and Medicaid Services Administrator Tom Scully. The suit alleges the following violations in the Medicare Rx Discount Card proposal:

• a lack of legislative authority on the part of the administration;

• violations of the Administrative Procedures Act and the Federal Advisory Committee Act; and

• an unlawful delegation of regulatory power to a private consortium.

Health officials created the plan in "secret meetings," the groups charge.

Judge Paul L. Friedman of the U.S. District Court of the District of Columbia granted the motion for a preliminary injunction, citing a lack of legislative authority on the part of the administration and violations of the Administrative Procedures Act. Friedman also approved a petition filed by the American Pharmaceutical Association (APhA) in Washington, DC, to intervene as a plaintiff in the action.

"Judge Friedman’s ruling is positive for our patients because it was a false promise and would have provided minimal discounts, at best," said APhA Executive Vice President John A. Gans, PharmD, in a statement after the ruling.

HHS officials told the Washington Post that they were reviewing their legal options and had not decided whether they would appeal the injunction. Although the injunction has no time limit, the ruling, at the very least, will postpone the program for months.

"How long [the injunction will last] will depend on whether the government appeals the decision," says Susan C. Winckler, RPh, JD, APhA’s group director of policy and advocacy. "For now, things are kind of frozen in place."

To provide "immediate and ongoing relief" to seniors paying full retail prices for prescription drugs, Bush proposed a voluntary prescription "discount card" program for Medicare beneficiaries that would have begun early next year. In the proposed plan, Medicare would endorse and promote a number of qualified, privately administered prescription drug discount cards, to be made available either free of charge or at a nominal, one-time enrollment charge (no more than $25/enrollment).

Administration-endorsed pharmaceutical benefit managers (PBMs) would administer the program. The PBMs would set the rates that participating pharmacies could charge Medicare beneficiaries for medications. The PBMs also would negotiate with drug manufacturers for lower prices, although there is no requirement that the PBMs pass along negotiated savings or manufacturer rebates to the pharmacy or the consumer, nor an explanation of how such rebates would be distributed, according to the APhA. If the PBMs did not pass along any savings to the pharmacy, then the pharmacy may find itself sponsoring the "discount" to the consumer out of its own budget.

"This approach finances the discounts to seniors primarily from community pharmacy, but pharmacies are not the cause of high drug prices," the APhA says.

Community pharmacies would receive most of the traffic from the discount cards, but hospital pharmacies would see them as well, Winckler says. "Many hospital pharmacies also prepare prescriptions for an outpatient population. Certainly seniors or whoever gets these discount cards could bring those into the outpatient pharmacy."

The APhA argues that the program has a misguided focus. "It affects the entire profession because it puts the focus on how much of a discount can I get on my medications?’ rather than am I getting the right medication and do I know how to use that medication?’" Winckler says. Instead of spending time with patients explaining how to use the medication, pharmacists would use part of that time explaining why the pharmacy doesn’t participate in the discount card program, or if it does, why the program doesn’t yield more of a discount when the government promised them one, she adds.

The discount card program also may disrupt consumer choice, Winckler says. For example, discount card programs may provide enrollees with financial incentives to use one pharmacy provider over another. "Then [pharmacists] have to re-establish relationships with those people who chose to participate in their card program."

To obtain the savings, some of these cards would require some strict formulary compliance, too, she says. "You may spend more time deciding when to change products solely from a financial standpoint because they are covered by the formulary [instead of determining] the clinical appropriateness of making those changes."

Now that the ruling has been made, Gans says it’s time to look ahead. "We can focus our energy on a real benefit for Medicare beneficiaries — a benefit that provides coverage for medications and services to make the best use of those medications."