RETAILERS REMAIN SKEPTICAL OF DRUG CARDS

WASHINGTON -- The retail pharmacy industry is watching closely as the federal government prepares to unveil its next proposal to support prescription drug discount cards for uninsured seniors.The first drug-card proposal, which would have allowed the government to encourage the issuance of private discount cards that give uninsured seniors up to 10% off on the retail price of their medications, was

WASHINGTON -- The retail pharmacy industry is watching closely as the federal government prepares to unveil its next proposal to support prescription drug discount cards for uninsured seniors.

The first drug-card proposal, which would have allowed the government to encourage the issuance of private discount cards that give uninsured seniors up to 10% off on the retail price of their medications, was stalled in court after pharmacy groups sued. A federal judge this month said the Centers for Medicaid and Medicare Services (CMS) was free to pursue a new plan, provided that the agency worked within the framework of the law for proposing a new regulation. The cards are seen as a temporary way to give seniors drug discounts until Congress can enact Medicare reforms that include prescription benefits.

"I guess we'll have to wait for them to publish their proposal in the Federal Register," said Ty Kelly, director of government relations, Food Marketing Institute, Washington. "Hopefully, they've learned from some of their previous missteps."

The new plan will be "basically the same concept" as the original, but will contain more details, according to a spokesman for CMS. Among the additional details, he said, could be a requirement for card issuers to demonstrate how discounts given by drug manufacturers would be passed on to the retail level. Retail pharmacy groups complained that in the original proposal, card issuers -- presumably pharmacy benefit management companies -- had no incentive to give drug discounts to retailers, who would take in less revenue if they chose to accept the discount cards.

The CMS spokesman said he expected the new proposal to be presented to the public within a few weeks. Some people in the industry and in the government still question whether CMS, which is part of the U.S. Department of Health and Human Services, has the authority to introduce a new regulation without Congressional approval.

Ron Sims, president and chief executive of the drug division at Marsh Supermarkets, Indianapolis, and chairman of the Food Marketing Institute Pharmacy Committee, said he was hopeful that retailers would be more involved in developing any new proposal.

"They need to get all the players at the table," he said. "Not just those who seek to profit from it, but the rest of us in there that need to deliver that care to the people."

He said addressing drug costs at the retail level was the wrong approach. Manufacturer's drug prices, he said, are "the largest component of the cost of providing pharmaceutical care.

"It's not delivering the product," he said. "It's the ingredient cost to us that's the largest component, and we're going to have to address that section of the cost to the consumer sooner rather than later."

In the meantime, some drug companies, including GlaxoSmithKline and Novartis, have proposed their own drug cards that seem to address retailers' concerns.

Sims said he was encouraged by some aspects of the drug companies' plans, but he would rather see more cooperation in the development of such programs.

"I see all of them addressing this with great big plans of their own," he said. "I don't see any coalition of people getting together and saying, 'Let's develop a program that manufacturers will help fund to do this."'

Larry Kocot, senior vice president and general counsel, National Association of Chain Drug Stores, Alexandria, Va., was skeptical of the legality of the CMS approach and maintained that the entire drug-card initiative was a political ploy.

"This discount card idea is nothing but a gimmick," he said. "It is a false promise to seniors that will not materialize in any discounts that are substantial enough to make a difference."