However, a new study shows many pharmacists may be flouting the measure, denying seniors the discount they're entitled to by law.
Although the program was designed in part to help poor people pay for their prescriptions, the study found the independent pharmacies most likely to be serving low-income neighborhoods are less likely than big chain stores to comply with the program.The study, which appears in tomorrow's New England Journal of Medicine, has important implications for the nation's elderly as the Bush administration tries to craft its own discount drug system for Medicare. The government's health insurance program for the elderly currently has no prescription drug coverage.
Pharmacy groups have sued the administration, and kept the effort tied up in court. However, the U.S. Department of Health and Human Services has received permission to seek public comment on a revised version of the plan.
"The educated consumer who knows to ask for the Medicare discount has a much greater chance of receiving the discount," says Dr. Joy Lewis, a consultant at RAND Health in Santa Monica and lead author of the study. "But it's important for policy makers to consider both education and monitoring of compliance" in whatever national system ultimately develops.
The California law is a top-down mandate to pharmacies requiring them to sell drugs to seniors at a fixed price set by the state's Medicaid program, which serves poor people. How they make up the difference is up to them -- though compliance, at least in theory, is not.
A team led by Lewis, who is also an internist at the Greater Los Angeles VA Health Care System, trained 15 Medicare recipients in California to act as customers at nearly 500 pharmacies in the San Francisco and Los Angeles areas.
The actors visited stores in April and May of 2001, asking about prices for 30-day supplies of three commonly prescribed medications: the painkiller Vioxx, the antidepressant Zoloft, and the cholesterol-lowering drug Lipitor. They were told to wait until they were offered the mandatory discount before inquiring if it was available.
Of the 494 pharmacies visited, 375, or 75 percent, ultimately offered the mock patients the Medi-Cal discount they were due. Yet only 45 percent did so without being prompted specifically for the cost cut, Lewis' group found.
"Although not required by law, fewer than half of the pharmacies proactively offered the discount," she says.
Another 122 stores refused to lower their prices even when presented with the drug card. Pharmacists at 86 of these said, falsely, that there was no Medicare discount available, while 24 said, again falsely, that their prices already included the cut. Eight said their prices were lower than the Medi-Cal rate, when in fact they weren't, and four more refused to quote prices. Since no prescriptions were filled, no laws were broken in the survey.
With the discounts, patients could have saved nearly $56 off average retail prices for the drugs, a 20 percent cut that brought the bill to a still impressive $218.45. "There is significant variation in that retail price," Lewis says, going up to more than $289 before the discount.
A recent Government Accounting Office report found participants in private drug-discount programs saved about 10 percent, on average, on their prescription bills, Lewis notes.
Many Medicare recipients don't pay retail, turning instead to the Internet and mail-order houses for lower-cost drugs, or using supplemental insurance. However, Lewis says the study reflects the experience of beneficiaries with no prescription coverage. "They're the ones paying the retail price."
In addition to being non-compliant with the law, pharmacies were loath to promote the discount. Signs advertising a "senior" or "Medicare" price break were posted at only 14 percent of stores. Of those, 67 offered the discount.
Chain stores were far more likely than smaller, independent druggists to comply with the program -- 91 percent versus 58 percent of those surveyed, the researchers found. Stores in the San Francisco area were more likely than those in and around Los Angeles to do so.
John Rother, director of policy at AARP, says the California study shows that "any Medicare drug benefit that's designed around discount cards has to deal with both the issue of the burden on beneficiaries and compliance." So far, Rother adds, the Bush proposal does the latter not at all and the former "only as a footnote."
America's seniors spend an average of $2,000 a year on prescription drugs, Rother says. Drug discount cards may make a dent in those bills, but they're far from the comprehensive approach that's needed, he says.
John Rector, general counsel for the National Community Pharmacists' Association, a group that represents 25,000 pharmacies, says that in competitive cities the prices drugstores charge can be lower than the Medicaid rate. However, he adds, "I hope people are complying" with the California law.
The pharmacists' group has rejected the White House drug discount plan, and is one of the parties that has filed suit to prevent it from being put into place.
A new government report projects that health care expenditures will rise to $2.8 billion by 2011, an increase of 7.3 percent a year. The share of that figure carved out by prescription drugs will likely drop, from 13.5 percent this year to 10.1 percent in 2011.
What To Do
Although many private companies offer drug discount cards, beware, Rector says. They're rife with fraud, aren't insurance and often have no contracts with pharmacies -- leaving consumers out cash and paying full price to boot.