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Say 'Aaah' | Health Dollars and Sense

A Model Plan for Medicare Drug Benefits

February 12, 2001|BOB ROSENBLATT

Few people outside Sacramento were paying much attention when the Legislature decided to help people enrolled in Medicare save money when filling a prescription.

The plan, now a year old, allows anyone with a Medicare card to walk into a drugstore and buy medications at the same discounted price the state of California pays when it buys drugs for Medi-Cal, a program for poor people. The average savings is an estimated 25% of the regular retail price.

Yet California's approach, simple and easy to understand, with no regulatory bureaucracy, could prove to be a model in the national debate as President Bush and Congress try to figure out how to add a prescription-drug benefit to Medicare for the first time in the program's 35-year history.

Washington's armies of elected officials, agency chieftains, lobbyists and consultants are all preparing for a tough battle involving the powerful pharmaceutical industry, HMOs and insurance companies. The drug companies in particular are determined to defeat any legislation that would give the federal government a voice in setting pharmaceutical prices if a drug benefit is added to Medicare.

California's carefully crafted plan, SB 393, avoided the struggles that will rage in Washington.

"The state takes a hands-off approach," said Susan Laudicina, director of research for the Blue Cross Blue Shield Assn., whose members' plans provide health insurance for 70 million people.

Circumventing a fight with the powerful drug industry, California legislators arranged the law so that the pharmacists' markup bears the brunt of the policy. Pharmacists sell at the discounted price, rather than retail, but in return, they get an increased processing fee for filling the prescriptions. They also get more customers in the stores, some of whom may be wooed away from mail-order firms if the store prices are lower.

The state doesn't need any enforcement team, inspectors or reports on consumers. Everything is done through the computer link between 5,000 pharmacies and the state's price list.

By contrast, both Bush and the Democrats in Congress are talking about plans notable for complexity.

California's program doesn't even require a sign-up mechanism. Anyone already enrolled in Medicare can get the state discount.

Customers show the Medicare card when they go to the drugstore to fill a prescription. More than 3.4 million price inquiries about drugs have been received through the state's computer system from 5,000 participating pharmacies since the program began a year ago. Because the state doesn't keep records of individual transactions, there is no way of knowing exactly how many people used the discount or how much money they saved, said Kevin Gorospe, chief of the pharmaceutical unit for the Medi-Cal division of the California Department of Health Services.

Consumers should always ask the pharmacist whether the store offers a senior discount and what the best price is for the medication. Some firms, such as Costco, may have price discounts deeper than the state Medi-Cal discount.

The pharmacy gets a $3.95 fee for processing and handling the prescription. Prices of the 50 leading drugs are posted by the DHS on its Web site. For example, a 5 milligram tablet of Coumadin is listed at a September price of slightly more than 65 cents a tablet, the latest figure posted on the DHS Web site. A month's supply of 30 would cost $23.69 (the price of a single tablet multiplied by 30, and the addition of a $3.95 professional fee.) Prices change frequently.

The DHS link is:

An alternate route is through the Web site of state Sen. Jackie Speier (D-San Francisco), the author of SB 393. Go to; click on "senators"; click on "Jackie Speier"; on the right side of her home page, click on the link "SB 393/DHS Prescription drug prices."

For general questions about the program, call the local Health Insurance Counseling and Advocacy Program, also known as HICAP, at (800) 434-0222. Consumers who believe that the local pharmacy is not charging the correct Medi-Cal discount can contact the Department of Health Services (DHS) by e-mail at or by phone at (916) 657-4302.

Some people may find themselves unable to afford the drugs they need even at a reduced price. They should tell the doctor or nurse, and find out if free samples are available. More than $7 billion worth of drugs is given to doctors as free samples each year, according to PhRMA, the pharmaceutical industry's trade association.

Drug companies also have patient assistance programs, under which they provide drugs free of charge at the request of a health care professional--a doctor, nurse or pharmacist.

A directory of the patient assistance programs is available at or by writing Directory of Prescription Drug Patient Assistance Programs, Public Affairs Division, PhRMA, 1100 15th St. NW, Suite 900, Washington, DC 20005.

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