Political prescription

Seniors have been hard hit by rising drug costs and that puts
pressure on the states to help those who have no coverage

by Bethany K. Warner

After three years of debate, the Illinois General Assembly appears poised to approve a state-sponsored plan designed to curtail the cost of some prescription drugs.

Those costs have gone up steadily over the past decade. Among the hardest hit are seniors on fixed incomes, individuals 65 and older who rely on some of the newer and more expensive drugs to prolong their lives and keep them independent. This has put increasing pressure on officials in Illinois and other states to meet the needs of a growing, generally politically active, population, especially those middle-income seniors who aren’t eligible for government help and can’t afford private coverage.

The states have been left to fill this gap because the federal government doesn’t yet include prescription coverage in Medicare, the health insurance program for middle-income seniors. Some states already have enacted such programs. And this spring Illinois lawmakers are again taking up proposals aimed at reducing the cost of drugs for Illinoisans who have no form of coverage.

It’s a sizable constituency. Primarily through its Medicaid program, the state already pays for drug prescriptions for some 130,000 low-income seniors. Another 800,000 or so are covered through employer-sponsored plans, HMOs or other private programs. But almost 500,000 of Illinois’ seniors must bear the cost themselves.

In fact, this uncovered population makes up approximately 31 percent of Illinois seniors, according to a 2002 Kaiser Family Foundation study. Rep. Jack Franks, a Woodstock Democrat, considers that statistic significant. “We want to make sure everyone is taken care of.”

He and Sen. Debbie DeFrancesco Halvorson, a Crete Democrat, are proposing similar state-sponsored drug discount cards for anyone who is 65 or older or is disabled. Both plans were approved by their respective chambers. Proponents advise seniors with drug coverage through private programs to keep that coverage, even if the discount plan becomes law. Low-income seniors, who can get assistance through the state’s Circuit Breaker and SeniorCare programs, would automat-ically benefit after they hit the annual caps for coverage under those programs. They estimate that 1.2 million Illinoisans would be eligible. But Halvorson and Franks expect the card will primarily help those seniors who have no coverage at all.

Though he hasn’t endorsed a plan, Gov. Rod Blagojevich has said he supports the concept of prescription drug discounts.

Under the current legislative proposals, there would be no income threshold for eligibility. The state would negotiate discounts with drug companies that choose to participate through its Department of Central Management Services. Seniors and disabled Illinoisans would pay a $25 annual fee for the card, entitling them to discounts on those medications. The legislation would require participating pharmacies to give set discounts on brand name and generic drugs, with deeper discounts coming after negotiations. Total discounts for prescriptions will vary by medication.

The idea is not without controversy. Franks and Halvorson maintain the program won’t cost the state. But officials at Central Management Services dispute that. They say it will take $27 million to initiate the discount. The sponsors counter that the card’s annual fee will cover the program’s administrative costs and would be sufficient to reimburse the state for start-up costs. While agency officials agree that the annual fees could cover ongoing administrative costs, they argue the $27 million start-up costs could not be recovered.

Still, Halvorson maintains the proposal is revenue neutral and would ensure that Illinois’ seniors won’t have to decide whether to pay for prescription drugs, food or utilities.

Advocates for seniors are on board. “When you survey seniors [prescription drug coverage] is the most important thing that keeps them independent,” says Donna Ginther, legislative representative of the Illinois chapter of AARP. “We know so much more about how to treat chronic illnesses.”

Ginther says more medication is used preventively or as therapy for what used to be a debilitating condition. Arthritis, she says, could send seniors to nursing homes a decade ago, but with the advances in drug therapies, they are able to live independently longer.

But these so-called designer drugs carry high price tags. According to a study by FamiliesUSA, a health care consumer advocacy group, the top 50 drugs prescribed for seniors in 2002 had an average yearly cost of $1,070. From 1990 to 2000, average drug prices rose by $23.73 per prescription, according to the Kaiser Family Foundation. And national statistics show that seniors, though they comprise about 12 percent of the population, take almost 37 percent of all prescription drugs. Moreover, the number of prescriptions individuals take increased from an average of seven to around 10.

The state’s Medicaid program, too, faces average increases in prescription costs that far outpaced that of other medical services.

The Pharmaceutical Research and Manufacturers of America, known as PhRMA, holds that price increases are a result of the cost of research and development of new innovative drugs. Other observers point to the use of direct marketing to consumers — including television ads — as a reason for rising drug prices.

The idea for state-sponsored discount cards is not new. Franks and Halvorson promoted this legislation in previous sessions, but former Senate GOP President James “Pate” Philip stopped it. That chamber is now Democrat-controlled. “After trying to do this for the last three years, I knew that there was opposition,” says Halvorson. “But through all the common sense of it and the realization finally that this is something we need to do, it’s finally coming to fruition.”

Illinois and other states are forced to deal with the rising cost of prescription drugs, says Cheryl Rivers, executive director of the National Legislative Association on Prescription Drug Prices, because the federal government has abdicated its role in providing drug coverage for seniors.

The Medicare system, though it covers hospital stays and surgery, has not been expanded to cover prescription drugs.

But President George W. Bush’s federal 2004 budget designates $400 billion in the next decade to modernize Medicare, including drug coverage. In Bush’s plan, seniors would have the option of a federal prescription discount card, but would be encouraged to enroll in low-cost managed care plans that provide drug coverage.

Illinois’ discount plan, many say, is only a stop-gap measure until there is a federal solution. “We think the answer is coverage, not just discounts,” says PhRMA’s senior assistant general counsel Marjorie Powell. “But clearly, discounts are helpful for people who don’t have coverage.”

But PhRMA objects to the way other states have crafted their discount plans and is worried about Illinois’ proposal. The group is concerned Medicaid patients will be lumped into Central Management Services’ negotiating pool, meaning drug companies could be forced to give discount card users the lower Medicaid discounted price. Maine tried including Medicaid patients in their discount program, and PhRMA is challenging that program before the U.S. Supreme Court, which must decide whether it violates federal Medicaid law.

But advocates of the discount cards are skeptical of PhRMA’s objections. Rivers, of the National Legislative Association on Prescription Drug Prices, notes that when state programs have reaped significant discounts, the drug companies — represented by PhRMA — have taken those programs to court. According to Franks, though, his proposal has been amended to ensure Medicaid patients will not be used as an iron fist, as PhRMA fears.

As of April, 17 states had enacted some type of discount program providing price relief on medication for seniors. Iowa uses a discount card program run by a nonprofit organization. This spring, Ohio is launching a discount program available to all seniors carrying that state’s Golden Buckeye Card, which already provides discounts for seniors at various retail locations.

Illinois’ sponsors hope this state’s plan could be initiated as soon as summer.

“The efforts that the states are making to get discounts outside of their [Medicaid] entitlements are worthy efforts,” Rivers says.

Illinois Issues, May 2003

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