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Last Updated: 2001-07-31 15:26:36 EDT (Reuters Health)

By Ori Twersky

WASHINGTON (Reuters Health) – Elderly Americans could end up paying more for prescription drugs under the Bush Administration's proposed prescription discount card program than they might pay at a discount pharmacy, a coalition of pharmacists and retail pharmacies said on Tuesday.

Speaking at a congressional briefing, members of the coalition said that the Administration's program offers false hope because it is based on supposed discounts from pharmacy benefit management (PBM) companies, which rarely pass along manufacturer discounts and often encourage the use of more expensive medications.

In fact, the Administration's program will create additional opportunities for PBMs to switch senior Americans to more expensive brand name drugs, for which PBMs often receive a rebate kickback from the manufacturers, the coalition said.

For example, data from a similar program in Washington State shows that seniors pay an average of 0.5% to 2.6% more for the top 250 medications, said Dr. Sean Sullivan, a professor of pharmacy and public health at the University of Washington in Seattle. Of the 25 most commonly prescribed drugs, only seven were less expensive under that program, Sullivan added.

As a result, the coalition said that the only way the Administration's proposal would work is if retail pharmacies were required by PBMs to further reduce the retail price. But this solution, the coalition claimed, is an economic impossibility since most pharmacies already operate on only a 2% profit margin.

"It's not going to happen. We already are at the bottom of where we can be," said Jim Smith, senior vice president of managed care for Woonsocket, Rhode Island-based CVS Pharmacy.

Instead, the coalition is proposing that the Administration adopt a "pharmacy benefit," under which pharmacists would be paid to review seniors' medication and encourage the use of generic drugs.

In total, the coalition said that this type of program would save more than $177 billion in medication-related adverse events that could be used to offset the costs. They also said that it would eliminate the existing PBM-related incentive to switch senior Americans to more expensive brand name drugs.

Under this program, the Administration could also require PBMs to pass along discounts while eliminating the need for prescription formularies, creating fewer hassles for patients and physicians alike, the coalition said.

But PBMs argue that the coalition is perpetuating a myth.

For instance, patients in the Washington State program are not encouraged to switch drugs, Anita Kawatra, a spokesperson for Merck-Medco, the administrator of the Washington State program, told Reuters Health.

According to Merck-Medco's figures, Kawatra added, Americans in its discount card programs save an average of about 11% on retail prices for brand name drugs and 18% for mail order brand name drugs. In addition, Merck-Medco maintains complete transparency by publishing all of its alternate prices on the company's Web site, Kawatra said.

"I think there is a sort of misunderstanding," Kawatra told Reuters Health. "We work with pharmaceutical companies to keep drug prices down."