Medicare Card Competition Heats Up

April 1, 2002
Jill Wechsler, Pharm Exec's Washington Correspondent

Jill Wechsler is Pharm Exec's Washington Corespondent

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-04-01-2002,

Eli Lilly recently joined the growing list of pharma companies offering discount card programs for Medicare beneficiaries in an effort to "do something now" to help low-income seniors afford medicines. Although Lilly chairman Sidney Taurel voiced support for a broader drug benefit for the elderly-as do his pharma colleagues-he described the LillyAnswers program as "quick relief" while the Medicare-reform debate continues.

Eli Lilly recently joined the growing list of pharma companies offering discount card programs for Medicare beneficiaries in an effort to "do something now" to help low-income seniors afford medicines. Although Lilly chairman Sidney Taurel voiced support for a broader drug benefit for the elderly-as do his pharma colleagues-he described the LillyAnswers program as "quick relief" while the Medicare-reform debate continues.

Lilly's program offers seniors with $24,000 or less in household income access to company products for $12 a month per prescription. That is less than the $15-per-prescription fee set by Pfizer in January or the discount card programs offered last year by Novartis and GlaxoSmithKline, which offer discounts off wholesale acquisition costs. But Lilly and Pfizer have lower income eligibility levels than the earlier cards and therefore offer limited access.

Following Lilly's announcement, the National Association of Chain Drug Stores (NACDS) proposed a "PharmacyCareOneCard" that would give seniors access to all the manufacturers' programs. Participating card sponsors will have to adopt the income criteria set by NACDS (same as Lilly's) and adhere to other requirements.

NACDS hopes that this initiative will head off efforts by the Bush administration to establish its Medicare RxDrug Card plan, which it recently revised. Under that program, Medicare would endorse cards offered by pharmacy benefit managers, pharmacies, senior organizations, and other private groups. Card "sponsors" would have to offer discounts on a long list of therapies and could use formularies, pharmacy networks, and other "tools" to negotiate discounts from manufacturers. Medicare beneficiaries would sign up for only one card to give sponsors sufficient market share to gain discounts and rebates. HHS expects the program to save seniors around 15 percent of their prescription costs. The revised plan requires pharma companies to offer discounts and seeks to appease pharmacists by allowing retailers to retain some of the savings from discounts to cover counseling and other costs.

Although Lilly estimates that its plan will help five million seniors obtain discounts on medicines, consumer groups are less optimistic about the benefits of the card programs. John Rother , policy director for the senior group AARP, expects that only two million people will qualify for Lilly's plan. Consumer advocates have criticized all the Medicare card plans for lacking long-term commitment and for doing little to help middle-income seniors afford costly medicines.

Even though the programs will take a bite out of revenues for Pfizer and Lilly, the companies hope that the discounts will encourage seniors to switch to their products from competitors. How strong a marketing tool the cards will be remains to be seen.