Savings for Low-Income Seniors Nine Times That of Higher-Income Seniors

Washington, DC; 04.14.04 — Medicare-sponsored prescription drug discount cards may well provide the greatest relief to beneficiaries with very low-incomes and/or those beneficiaries with poor health and high prescription drug costs, according to a new analysis conducted by Harvard Medical School researchers and posted on the website of Health Affairs, the Pharmaceutical Care Management Association said today. PCMA is the national trade association representing America’s pharmaceutical benefit managers (PBMs).

“The analysis provided by researchers at Harvard Medical School and posted on Health Affairs’website is a fresh reminder that Medicare drug discount cards will help lower the cost of prescription drugs for millions of seniors,”said PCMA President & CEO Mark Merritt. “For low-income seniors and those beneficiaries in poor health, the data suggest the savings are likely to be even more pronounced.”

The Medicare prescription drug discount card program is an interim measure that becomes effective on June 1. PCMA member companies expect to participate by offering beneficiaries national and regional Medicare-sponsored drug discount cards and through partnership with retail pharmacies and Medicare Advantage health plans. PCMA estimates that a vast majority of the Medicare-sponsored drug discount cards will be administered by PBMs.

Noting that Medicare beneficiaries without any prescription drug coverage “face the highest retail drug prices,”the analysis estimates that beneficiaries are likely to see an average savings of 17.4 percent below what cash-paying customers would pay at the retail pharmacy counter. According to the analysis, the average savings for brand-name drugs are likely to be 14 percent. For generics, the average savings are likely to be 41.1 percent. In 2004 dollars, these figures would translate to average beneficiary savings of $238 dollars.

The data suggest that low-income beneficiaries may benefit most from the new Medicare drug discount cards. Significantly, these findings do not take into account the $600 dollar annual subsidy that will be available to low-income beneficiaries enrolling in a Medicare-sponsored drug card program:

According to the analysis, in 2000, approximately two million beneficiaries with very low incomes lacked drug coverage. For these beneficiaries, out-of-pocket spending on prescription drugs represented a full 10 percent of their income in 2000.
When compared with higher income seniors â??those with incomes above $40,000 â??the savings accruing to very low-income seniors because of the drug discount card becomes much more pronounced. The analysis finds that as a proportion of their income, very low-income seniors will see savings nine times that of higher-income seniors.
For those beneficiaries with self-reported “poor”health and/or those with high prescription drug costs, the Medicare drug discount card is also likely to provide relief:

According to the analysis, out-of-pocket savings as a percent of income for beneficiaries in poor health without drug coverage will be nearly five times as much as a beneficiary in “excellent”health.
Moreover, in 2000, the highest-spending 10 percent of seniors without drug coverage paid $1,874 or more in out-of-pocket costs on prescription drugs. The dollar savings accruing to these seniors — $481 dollars on average â??are estimated to be nearly four times as much as that of the average beneficiary savings.
While the analysis did not distinguish between savings provided at the retail pharmacy counter and those available through the mail-order pharmacy option, other data suggest that the mail-order pharmacy option will provide seniors with even deeper discounts â??in some cases more than 50 percent.

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The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614