Medicare-Approved Drug Discount Cards and Prescription Drug Prices

Marie A. Chisholm; Jeanie Chinaye Turner; Joseph T. Dipiro

Disclosures

Am J Health Syst Pharm. 2005;62(14):1482-1487. 

In This Article

Abstract and Introduction

Purpose: Prescription drug prices with and without the use of Medicareapproved drug discount card programs (MADDCs) to purchase medications were studied.
Methods: The Medicare.gov Web site was used to determine if the 200 most frequently prescribed drugs in the United States in 2003 were covered by a MADDC. The lowest and highest MADDC prices at local and mail-order pharmacies and the corresponding non-MADDC prices at the same community pharmacies or an Internet pharmacy, respectively, were determined. Wilcoxon signed rank tests were used to determine if there was a difference between non-MADDC medication prices and MADDC prices.
Results: Of the top 200 medications prescribed in 2003, 192 (96%) and 189 (94.5%) were covered by at least one MADDC in a local pharmacy or mail-order pharmacy, respectively. Overall, MADDCs saved money compared with purchasing medications without a MADDC (p < 0.001). However, a MADDC resulted in a higher price than the retail non-MADDC price for 61 (31.8%) of the prescription medications at local pharmacies, and using a MADDC at a mail-order pharmacy resulted in a higher price than the Internet pharmacy non-MADDC price for 143 (75.7%) of the drugs.
Conclusion: MADDC prices for common prescription medications were generally lower than prices when MADDCs were not used. The highest mail-order MADDC prices were often higher than Internet non- MADDC prices.

Many Americans lack adequate prescription drug insurance, and access to prescription drugs is a growing concern because of increasing prescription drug costs.[1] In 2001, $140.8 billion was spent on prescription drugs by both public consumers ($109.4 billion) and private consumers ($31.4 billion).[2–5] This sum represents a greater than threefold increase since 1990, when $40.3 billion was spent.[2–5] In 2002 and 2003, the amount spent on prescription drugs by consumers jumped to $161.8 billion and $179.2 billion, respectively.[4] By 2012, spending is projected to increase to $445 billion or more.[3,6]

Inadequate prescription drug coverage can lead to financial devastation for individuals. In 2001, 1 in 10 Americans surveyed by the Kaiser Family Foundation and the Harvard School of Public Health spent $1000 or more out-of-pocket on prescription drugs.[7] By 2010, greater than 15% (an increase from the 9% reported in 1999) of Americans' annual expenditure on personal health care will be spent on prescription drugs. Personal health care is defined as therapeutic goods or services that are rendered to treat or prevent a specific disease or condition in a specific person and includes hospital care, professional services (e.g., physician, clinical, and dental services), nursing-home and home health care, and retail sales of medical products, such as prescription drugs and medical equipment.[4,8–10]

The Medicare Prescription Drug Improvement and Modernization Act of 2003 addresses prescription drug costs for Medicare beneficiaries. To qualify for a Medicare-approved drug discount card program (MADDC), an individual has to be a Medicare beneficiary. To qualify for Medicare, the patient has to be over 65 years of age, blind, or disabled or have endstage renal disease.[11,12] Also, the patient or the patient's spouse has to have contributed to Medicare while employed or to be a dependent child of a contributor. As of May 2004, Medicare beneficiaries could enroll in a MADDC; these programs are slated to end in 2006, when the Medicare prescription drug benefit is proposed to begin.[13]

MADDCs, which are offered by private companies, were implemented to help lower Medicare recipients' outpatient prescription drug costs by offering a discount if the Medicare recipient (1) does not have health insurance that covers outpatient prescriptions, (2) has health insurance that limits how much it will pay for outpatient prescriptions, and the individual has exceeded this amount, (3) does not receive any discount (including insurance coverage reductions) off the price of his or her outpatient prescriptions, or (4) does not currently get a discount that is less than the MADDC's offer.[13] Discounts provided by MADDCs do not apply to medications that Medicare currently covers (e.g., immunosuppressants and some cancer medications). Enrollment fees for MADDCs range from $0 to $30.[13] However, if the annual income is below a certain level (in 2005, no more than $12,919 for single individuals and no more than $17,320 for married couples), the individual does not have to pay the program enrollment fee and can receive up to $600 of credit toward prescription medications per calendar year.[14]

Patients select which MADDC they want to enroll in. Individuals can be enrolled in only one MADDC at a time, and changing programs is restricted, although the discount provided by each program for each prescription medication can change at any time.[13] Changing MADDCs is allowed only if the patient has moved to a state in which the current MADDC is not offered, has joined or left a Medicare managed care plan, or has entered or left a long-term-care facility, or if a specific MADDC is no longer offered. These restrictions and the various discounts support the need for careful program selection.

For health care practitioners to support patient enrollment in MADDCs and to determine the effectiveness of these programs in decreasing prescription drug costs for patients, the potential savings to patients should be thoroughly evaluated. The objective of our study was to determine (1) whether MADDCs are available for the most commonly prescribed medications, (2) the largest MADDC price differences for the same prescriptions between community and mail-order pharmacies, (3) whether the MADDC price for a prescription medication can exceed the non- MADDC price, and (4) the number of prescription drugs that an individual needs to purchase annually to justify the cost of enrolling in a MADDC.

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