COVER STORY

A WINNING HAND?

Pharmacists are facing a myriad of prescription discount cards in a high-stakes game

Pharmacists didn't like discount prescription drug cards when they sprang up about 10 years ago. And they like them even less now that politicians, drug companies, and pharmacy benefit managers have latched onto the scheme as a way to offer senior citizens lower prices in the absence of an actual Medicare drug benefit.

Everybody and his cousin is now hyping discount prescription cards: the Bush Administration, Congress, state governments, PBMs, and pharmaceutical companies. One reason Rx discount cards are so attractive is that they are a way to respond to the growing clamor over rapidly escalating drug prices that have put medications beyond the reach of many of the millions of seniors without drug coverage. At the same time, Congress seems to lack the political will to pass meaningful Medicare reform legislation, including an Rx drug benefit.

Discount cards grew out of the private sector, where they are still flogged by ads and infomercials. The companies typically charge an individual or family a monthly or annual fee in exchange for promises of discounts at their pharmacy. Of course, they don't tell their customers that their pharmacy may never have agreed to give the discount and may not honor the card.

Overly optimistic promises and underperforming discounts have caused consumer complaints. As a result, several states have begun to regulate the sale and marketing of Rx discount card plans, which often promise huge savings—50%, 70%, even 90%. More than a dozen states have mandated that Rx cards must include an actual contract with participating pharmacies, and they must clearly state that the card is not an insurance program. Other states, including California and Washington, have prohibited discount drug card companies from operating inside their borders unless they are licensed as insurance companies.

"Consumers see late-night TV ads and sign up for $7.99 a month and agree to give up the privacy of their records," said John Rector, general counsel, National Community Pharmacists Association. "They go to the drugstore only to be told, 'You've been had. We don't know anything about it.' There are a lot more of those cards than any other kind. Pharmacies don't have to honor the cards, but the Merck-Medco/Reader's Digest plan tried to argue that because the pharmacy had signed an insurance contract as part of a network, they had to honor the [discount] cards. That is a crock, and we helped defeat that."

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