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GAO Finds Drug Makers Beat PBMs on Discount Prices

Cheryl A. Thompson

Senior citizens can buy their prescription medications at a lower price by using a manufacturer's discount card instead of a card administered by a pharmacy benefit management company (PBM), according to a General Accounting Office (GAO) report released Monday.

GAO, in a study requested by five Democratic members of the House of Representatives, found that PBM-administered drug discount cards offered any adult who paid the enrollment fee a price that was 10–15 percent off a standard reference price or a community pharmacy's usual price, whichever was less. Compared with that arrangement, pharmaceutical manufacturers' cards offered certain Medicare beneficiaries either a larger discount off a lower reference price or a 30-day supply of medication for a flat price of $10 or $15.

Drug manufacturers restricted their card programs to Medicare beneficiaries who lacked prescription coverage and whose income was less than a certain level—perhaps the reason GAO found that the prices were generally lower than could be obtained with a PBM-sponsored card . Those manufacturer programs also covered only prescription medications made by the sponsoring company or, in the case of Together Rx, the participating firms.

GAO also found that manufacturers paid participating community pharmacies a portion of the difference between their usual price for a prescription and the price paid by the senior who had a company-sponsored discount card, whereas not all PBMs helped cover the difference.

Medco Health Solutions Inc. and WellPoint Pharmacy Management, GAO reported, did not send community pharmacies a payment to help cover the difference between the usual and discount prices.

In conducting the study, GAO looked at the prices charged by 40 pharmacies in California, North Dakota, and Washington, D.C., for 30-day supplies of alendronate 70 mg, amlopidine 5 mg, atenolol 50 mg, atorvastatin 10 mg, celecoxib 200 mg, conjugated estrogens 0.625mg, furosemide 40 mg, omeprazole 20 mg, and simvastatin 20 mg. Prices were obtained in April 2002.

Arkansas's Mike Ross, one of the representatives who requested the study, said in a press release Monday that the average savings of less than $5 per prescription with a PBM-sponsored discount card did not provide the level of help that Medicare beneficiaries need in buying medications.

One of the issues under discussion by House and Senate conferees on Medicare reform is a government-endorsed prescription-drug discount card program that would tide seniors over till actual coverage of outpatient medications began. PBMs and possibly other private-sector groups would sponsor the cards.

The Medicare-Endorsed Prescription Drug Plan Assistance Initiative, proposed by the Bush Administration through the Centers for Medicare & Medicaid Services, has been on hold since January when a U.S. district court ruled against implementation.