Private-Sector Rx Firm Offers National Discounts

Published November 1, 2001

GlaxoSmithKline (GSK) announced the creation of a new discount program allowing low-income Medicare beneficiaries who lack drug coverage to purchase most of the company’s medications at discounts of at least 25 percent.

Under the firm’s Orange Card program, which will go into effect January 1, all Medicare beneficiaries with annual incomes at or below 300 percent of the federal poverty level ($26,000 for an individual or $35,000 for a couple) will receive discounts on all GSK medications sold outside hospitals.

Among GSK’s most notable drugs are Avandia for diabetes, Paxil for depression, and Flovent for asthma. The company said 11 million people could qualify for the program. Participants would pay nothing for the orange-colored ID card and would show it at most pharmacies to receive the discounts.

Save 25 Percent or More

According to the Philadelphia Inquirer, David Stout, GSK’s president of U.S. pharmaceutical operations, said the company will provide a 25 percent discount on the wholesale price of the medication; depending on pharmacy pricing, consumers will receive 25 percent to 40 percent discounts on what they would pay otherwise. GSK said it is also negotiating with pharmacies to provide an additional discount.

The Wall Street Journal reported the program will be administered by pharmacy-benefit manager Express Scripts Inc. Starting November 1, those eligible for the Orange Card program can pick up an application in their doctor’s office or call the GSK Orange Card information line at 888/672-6436. Applicants will be required to provide their Medicare beneficiary number and their previous year’s federal income-tax return.

Closing the Medicaid Gap

GSK officials said they were launching the program to assist seniors who cannot afford prescription drug coverage. GSK CEO Jean Pierre Garnier told the New York Times the program would serve as a stopgap until Congress passes a comprehensive Medicare drug benefit. “It is a shame some patients can’t get the full benefits of our drugs for economic reasons. We are trying to close the gap,” he said.

The New York Times noted the discount program may also give GSK a competitive advantage over other pharmaceutical companies that market similar drugs. However, many drug companies who are members of the Pharmaceutical Research and Manufacturers Association (PhRMA) already offer free prescription medications to qualified citizens. (See “My Turn: Stop Demonizing the Good Guys,” page 18.)

Bush Administration Support

GSK’s announcement follows an attempt by the Bush administration earlier this year to launch a drug discount card program. Under the Bush plan, pharmacy benefit managers would negotiate discounts with drug manufacturers and pharmacies, then sell discount cards to Medicare beneficiaries for up to $25. The cards would allow holders to purchase pharmaceuticals at a 15 to 20 percent discount.

The Bush proposal, however, was blocked by a federal judge in September after pharmacy groups said that they would bear the burden of the discounts. (See “Rx Discount Plan Stalled by Judge,” Health Care News, October 2001.) The judge issued a temporary injunction, ruling the administration may have lacked the authority to implement the plan without congressional approval.

According to a recent Kaiser Health Policy Report, Health and Human Services (HHS) spokesperson Bill Pierce said the administration “is not endorsing” GSK’s plan for seniors. “Obviously, they are doing something like the government wanted to do before the lawsuit.”

HHS Secretary Tommy Thompson appeared with GSK officials at an October 3 news conference in Washington to announce the launch of the program.