Medicare drug discount cards continue to drop prices

May 15 2004

After the first full week of making information on assured drug price discounts available to beneficiaries, the Centers for Medicare & Medicaid Services' review of the savings offered by drug card sponsors shows that more cards will be offering lower prices to beneficiaries, compared with prices posted last week.

"Seniors will be able to reap the benefits of competition in terms of lower prices," Health and Human Services Secretary Tommy G. Thompson said. "Card sponsors are comparing their discounts to those of their competitors and they're lowering prices to attract the business of Medicare beneficiaries."

Far more cards are offering not only discounts below Average Wholesale Price (AWP), but more importantly, discounts below the average retail price paid by all Americans, including Americans with public or private insurance, as shown in a report CMS released last week. Now, CMS is seeing further evidence that these cards will provide significant help to consumers.

This week-to-week improvement means more cards are offering better prices, with those cards that had higher prices last week, lowering their prices to become more competitive.

For Medicare-approved cards that provided prices last week and again this week, the average discount price across all cards reported on "Price Compare" declined by approximately 11.5 percent for brand-name drugs and 12.5 percent for generic drugs for zip codes in 31 states examined by CMS. This price decline in the second week was also greater in those cards whose prices were higher than average in the first week - for example, in some states there was up to a 25 percent price decrease.

"From a variety of analyses we are seeing more discounts on more Medicare-approved cards - discounts of at least 15 percent from usual prices for brand-name drugs in retail pharmacies, and larger discounts for generic drugs and mail-order drugs, and prices well below the average drug prices for all Americans - including those with public or private insurance," said CMS Administrator Mark B. McClellan, M.D., Ph.D.

Sponsors are now comparing their discounts to their competitors, more cards are offering favorable prices, and CMS is working with card sponsors to make sure that the best discounts they can assure are published for Medicare beneficiaries.

Pricing information from most of the 73 approved cards is now available at www.medicare.gov.

CMS analyses confirm substantial discounts on many cards.

• For brand-name drugs in retail pharmacies, cards provide discounts of 15 to 20 percent or more below AWP and 11 to 17 percent below the national average drug store prices paid by all Americans, including the prices paid by Americans with public and private insurance, Americans without drug coverage including millions of seniors often have to pay 'list' prices at the drug store; in contrast, Americans with public and private insurance usually get discounted prices for their medicines, in addition to drug coverage. For example in Maryland, there are discounts up to 27 percent or more below the usual quoted cash prices.
• Cards provide significantly larger discounts on mail-order drugs, and commonly exceed savings available from Internet sites.
• Even larger savings are available on generic drugs, ranging between 30 to 60 percent below the usual retail prices paid by Americans.