Court squashes plan for Medicare prescription drug card

CMS considers an appeal but also plans to work with Congress to push for a comprehensive drug benefit.

By Tanya Albert, amednews staff. Feb. 17, 2003.

A federal court in late January ruled that the Centers for Medicare & Medicaid Services cannot proceed with its second plan to implement Medicare prescription drug coverage cards.

In a 40-minute ruling from the bench, Judge Paul L. Friedman of the U.S. District Court for the District of Columbia said the plan went beyond what CMS and the Health and Human Services Dept. were authorized to do under the Medicare Act.

Case at a glance
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Friedman agreed with arguments by the National Community Pharmacists Assn. and the National Assn. of Chain Drug Stores that the government must go through Congress if it wants to involve the private sector.

He permanently enjoined CMS and HHS from implementing the program, called the Medicare-Endorsed Prescription Drug Card Assistance Initiative. His ruling pleased community pharmacists and chain pharmacies.

"While we applaud the administration's good intentions to address this problem, we are very pleased with this decision because it shifts the debate to Congress, where a number of creative solutions and viewpoints should be considered," said S. Lawrence Kocot, NACDS general counsel and senior vice president. The group represents 215 chain community pharmacy companies.

The drug card plan "would have caused considerable harm to many of the nation's community pharmacies, possibly restricting seniors' access to the personal service and medication advice they often seek from our members," said Bruce Roberts, executive vice president and chief operating officer for NCPA. The association represents the owners, managers and employees of about 25,000 independent community pharmacies.

The Bush administration first proposed a plan for government-approved "Medicare Rx" cards in 2001. Under the program, pharmacy benefit managers would use Medicare beneficiaries' combined purchasing power to negotiate discounts from manufacturers and pharmacies to generate savings.

NCPA and NACDS filed their lawsuit shortly after the program was announced, and in September 2001 Friedman issued a preliminary injunction. CMS modified the original plan, and that new version is what Friedman rejected in January.

CMS is disappointed by the judge's ruling, said the agency's administrator, Tom Scully.

"We continue to believe that the Medicare law gives CMS the authority to assist and educate beneficiaries on how to get prescription drugs at affordable prices, immediately," he said. "While our Medicare-endorsed prescription drug card initiative does not provide a substitute for a Medicare prescription drug benefit, we believe the initiative is an important step in providing affordable prescription drugs to our nation's seniors."

The agency will work with Congress to clarify its authority, Scully added.

CMS could appeal the decision. At press time, Scully said agency officials were reviewing the court's decision and considering their options.

"The bright side of the decision is that after long delay, it speeds the course of a likely appeal, so that we might finally go forward to assist our nation's Medicare beneficiaries with their prescription drug costs," he said.

Some Democratic lawmakers argue that the administration should not appeal the ruling. Reps. Fortney "Pete" Stark (D, Calif.) and Sherrod Brown (D, Ohio) asked the General Accounting Office to audit the use of taxpayer dollars in the case.

"The Bush administration is wasting time and money on a frivolous lawsuit that won't do a thing to help seniors afford prescription drugs," Stark said.

ADDITIONAL INFORMATION:

Case at a glance

National Assn. of Chain Drug Stores and National Community Pharmacists Assn. v. Tommy G. Thompson and Thomas A. Scully
Venue: U.S. District Court for the District of Columbia
At issue: Whether the Centers for Medicare & Medicaid Services can go forward with revised plans to create a Medicare prescription drug discount card program. The court said no.
Potential impact: The government said the ruling hinders a program that would help seniors cut prescription drug costs while Congress works to overhaul Medicare. The NACDS and NCPA said the decision rightfully would allow Congress to create a program after listening to different views on the issue.