	Background

Prescription drug discount cards are a relatively new option for  consumers. Consumers  can have as many different cards as they like. A card program would have to be open to all  Medicare beneficiaries. Negotiation of discounts. Information for beneficiaries. Characteristics of Drug Discount Cards Vary Based on Their Sponsor

PBM-administered drug discount cards differ from pharmaceutical- manufacturer-sponsored cards with respect to eligibility, the range of  drugs they cover, the extent to which the retail pharmacy is paid for all or  part of the difference between the price a person pays without a discount  card and the discount card price for a particular drug, and the prices  available with a card. The discount card programs administered by PBMs  are available to any adult, while the pharmaceutical manufacturers’ cards  are available only to Medicare-eligible individuals and couples with  incomes below a certain level who do not have prescription drug  coverage. Each PBM-administered card covers most outpatient  prescription drugs, while the cards sponsored by pharmaceutical  manufacturers generally provide discounts only on the outpatient  prescription drugs that company produces. Unlike the PBM-administered cards, which are available to any individual,  the drug company-sponsored cards are available only to Medicare-eligible  individuals and couples with no prescription drug coverage who earn less  than a certain amount. For purchases with the Medco Health Solutions and WellPoint  Health PBM-administered cards, there is no such payment. Drug prices available with pharmaceutical manufacturer-sponsored cards  are typically lower than the prices available with PBM-administered cards  because a manufacturer-sponsored card’s price is either a percentage off  the manufacturer’s list price to wholesalers, which is generally lower  than average wholesale price, or a dollar amount for a specified amount of  a drug. Savings achieved through a PBM- administered card would be reduced by the annual or one-time fee that the  card charges. Cards Used at Retail Pharmacies

The range of savings achieved using a PBM-administered drug discount  card at a retail pharmacy for a 30-day supply of the nine drugs we  examined varied within and across geographic areas, primarily because of  differences in the usual prices charged by the pharmacies. Median savings available with a PBM-administered card in the  Washington, D.C. pharmacies ranged from $2.09 to $20.95 for the nine  drugs. All 14 of the surveyed pharmacies offered a 10 percent senior  discount. Median savings in North Dakota ranged from $0.54 to $7.72 for the nine  drugs or from 1.3 percent to 42.3 percent off the median pharmacy price. In California, Medi-Cal, the state’s Medicaid program, requires retail  pharmacies that participate in the program to offer the Medi-Cal price to  Medicare beneficiaries who do not have prescription drug coverage. At  the 10 Medi-Cal-participating pharmacies, savings for seven of the nine  drugs ranged from $0.44 to $13.06 or from 0.7 percent to 11.1 percent off  the median pharmacy price. The Medi-Cal prices for the other two drugs at  these pharmacies were lower than the median drug card prices for these  drugs so the use of the card offered no savings. In California, mail order prices  using a PBM-administered drug card were lower than the Medi-Cal price  for eight of the nine drugs we examined, resulting in savings ranging from  $1.03 to $19.67; the Medi-Cal price was lower than the mail order drug card  prices for the other drug.
Why GAO Did This Study

While prescription drugs have become an increasingly important part of health care for the elderly, more than one-quarter of all Medicare beneficiaries have no prescription drug coverage. Over the past decade, private companies and not-for-profit organizations have sponsored prescription drug discount cards that offer discounts from the prices the elderly would otherwise have to pay for their prescriptions. These cards are typically administered by pharmacy benefit managers (PBM). Pharmaceutical manufacturers also sponsor and administer their own discount cards. The Administration has been interested in endorsing specific drug cards for Medicare beneficiaries to make the discounts more widely available. Legislative proposals in the Senate and House of Representatives have included drug cards as a means to lower prescription drug prices for Medicare beneficiaries. GAO was asked to examine how existing drug discount cards work and the prices available to card holders. Specifically, GAO evaluated the extent to which PBM-administered drug discount cards offer savings off non-card prices at 40 pharmacies in California, North Dakota, and Washington, D.C., and the differences between PBM-administered cards and cards sponsored by pharmaceutical manufacturers.

What GAO Found

Medicare beneficiaries can receive prices with prescription drug discount cards at retail pharmacies that are generally lower than those available to seniors without cards. Prices available for a particular drug tend to be similar across PBM-administered cards. Savings from PBM-administered cards, however, can differ because retail pharmacy prices vary widely. For example, in Washington, D.C., which had the highest median retail pharmacy prices of the three areas GAO surveyed, median savings using a PBM-administered card ranged from $2.09 to $20.95 for a 30-day supply of the nine drugs frequently prescribed for the elderly that GAO examined. This was after accounting for the 10 percent discount for senior citizens given by each of the 14 surveyed pharmacies. Savings in California with the use of a card tended to be lower because 10 of the 13 California pharmacies GAO surveyed participated in the state's Medicaid program (Medi-Cal) and are required to give Medicare beneficiaries the Medi-Cal price. For seven of the nine drugs, savings ranged from $0.44 to $13.06. For the other two drugs the cards offered no savings at Medi-Cal-participating pharmacies because the Medi-Cal prices were lower than the median price available with a PBM-administered card. Savings in North Dakota for the nine drugs ranged from $0.54 to $7.72 even though 10 of the 13 pharmacies there did not offer a senior discount. Any savings achieved with a card are reduced by the annual or one-time fee charged by the PBM-administered cards. Prices available with a pharmaceutical-manufacturer-sponsored card for a particular drug are typically lower than prices obtained using PBM-administered cards, and are often a flat price of $10 or $15. PBM-administered cards differ from pharmaceutical-manufacturer-sponsored cards with respect to eligibility and the range of drugs they cover, as well as the price available with the card. PBM-administered discount cards are available to all adults and can be used to purchase most outpatient prescriptions. Pharmaceutical-manufacturer-sponsored cards are available only to Medicare beneficiaries with incomes below a certain level who have no prescription drug coverage and can be used to purchase only outpatient prescription drugs produced by the sponsoring manufacturers.