CPA News Releases, Advisories, and Editorials
| For Immediate Release July 11, 2001 |
For Further Information Center for Policy Alternatives Bernie Horn (202) 956-5135 |
President Bush’s Prescription Drug Discount Card: Just Window Dressing
Washington, D.C. — President Bushﾒs plan to provide prescription drug discount cards to seniors is an empty gesture, providing no real relief to Americaﾒs seniors.
The Administration asserted today that its scheme will lower prices by increasing private drug plansﾒ “ability to move market share” and stimulating “competitive price negotiation.” But in answer to a question by the media, the Administration declined to say that its plan would achieve any greater discounts than are currently available to seniors through existing drug discount plans like the ones offered by AARP and Merck-Medco.
In fact, the Administration plan cannot deliver significant drug discounts because there is no incentive for drug companies to bid against each other. HMOs and health insurance companies use the leverage of their formulariesﾗlists of approved drugsﾗto force pharmaceutical companies to compete against one another. If a company refuses to negotiate or gives an inadequate price break, it can be penalized through the formularyﾗtherefore losing market share. The fatal flaw in the Administrationﾒs plan is the absence of any similar mechanism.
The Administrationﾒs plan actually amounts to no more than government advertising for existing for-profit drug distribution businesses. This advertising will begin with “an educational program this fall,” according to the Administration.
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In contrast to the Administrationﾒs phantom discount, the State of Maine has enacted a law to provide a real prescription drug discount card program. It delivers substantially lower prices by forcing drug companies to negotiate using the threat of “prior authorization,” which is similar to a formulary. (The U.S. Court of Appeals for the First Circuit ruled on May 16, 2001 that this Maine law is constitutional. For the text of this decision,
click here.)For more information about fair prescription drug pricing, contact Bernie Horn (202-262-9916) or Kristina Wilfore (202-956-5141) at the Center for Policy Alternatives, or see
www.stateaction.org. The Center for Policy Alternatives is the nationﾒs leading nonpartisan progressive public policy and leadership development center serving state legislators, state policy organizations and state grassroots leaders.###
-Read USA Today’s editorial in support of the Bush proposal and CPA’s op-ed in response.