Policy Documents

Private Discounts, Public Subsidies: How The Medicare Prescription Drug Discount Card Really Works

Joseph Antos and Ximena Pinell –
September 1, 2004

The authors contend in this publication from AEI Press, that 

Not good enough. Too complicated. A program that will benefit drug companies more than it will benefit seniors. These charges have been leveled at the new Medicare prescription drug discount card program that began in June. That program, part of the $400 billion prescription drug benefit and Medicare modernization bill signed into law in December 2003, is a short-term measure to provide financial assistance to seniors and disabled Medicare beneficiaries for the purchase of their prescription drugs.1 Despite the early criticisms, the program is already having a favorable impact on beneficiaries. The drug discount card program is designed to bring the benefits of group purchasing to seniors, resulting in lower prices at the pharmacy. It also offers cash assistance to low-income seniors who have no other insurance coverage for prescription drugs. In addition, needy seniors benefit from special discounts offered by pharmaceutical manufacturers through the Medicare-approved card. Many critics wasted no time in pronouncing the Medicare discount card program a failure.

Some claimed the discounts under the program would be inadequate months before those discounts could be known.