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Bush Administration Allowed to Move Forward on Drug Discount Card

Originally published by Reuters Health, November 8, 2001

WASHINGTON — A federal judge this week allowed the Bush administration to proceed with a proposal to provide private prescription drug discount cards to Medicare beneficiaries, but questions remain about whether it has the legal authority to launch the program.

In September, Federal District Court Judge Paul Friedman blocked the Centers for Medicare and Medicaid Services (CMS) from proceeding with plans to give Medicare recipients discount cards administered by private pharmacy benefit managers.

Pharmacy groups, led by the National Association of Chain Drug Stores and the National Association of Community Pharmacists, filed the suit, fearing that their members, rather than drug manufacturers, would end up paying for the discounts. Their lawsuit charged that the Bush administration violated federal requirements for a formal rulemaking process with public notice and a comment period, and that Medicare officials lacked the legal authority to create the program in the first place.

CMS officials responded by effectively conceding that creating such a program would require the usual period for rulemaking (normally six months or more), and proposed to the judge that they be allowed to publish proposed rules for a new program.

On Monday, the judge agreed, although his injunction against the original program remains in place.

“We are very pleased with the court’s decision allowing the Centers for Medicare and Medicaid Services to move forward with plans for notice and comment on a prescription drug discount card program,” said CMS Administrator Tom Scully. “The Administration’s efforts to offer a Medicare-endorsed prescription drug card would provide necessary relief to the millions of seniors and disabled Americans who are forced to pay full price for their prescriptions.”

Representatives of the pharmacy groups say they are satisfied with the judge’s actions. “In effect, the earlier proposal is history, and that was our objective,” said John Rector, general counsel for the National Association of Community Pharmacists.

They said, however, that it remains unclear whether the administration can enact the program in the absence of Congressional action. “Where they’re getting their authority is the question of the day,” said National Association of Chain Drug Stores Senior Vice President and General Counsel Larry Kocot. It also remains unclear how different the new proposal will be from the one the administration told the judge it has dropped.

Among those who remain skeptical on that front is Rep. John Dingell, D-Mich., senior Democrat on the House Energy and Commerce Committee, which oversees Medicare. Dingell reportedly gave administration officials a hard time at a private briefing on the plan on Wednesday.

“The package they’re pushing seems reminiscent of one we’ve seen before,” he told Reuters Health. “They’ve told me nothing that makes it sound like anything different than old wine in new bottles.” A CMS spokesman said the administration has no timetable yet for publishing its new proposal.