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Bush Offers New Drug Plan Similar to One Court Barred
WASHINGTON, Feb. 28 — Stymied once by a federal judge, President Bush offered a proposal today to require pharmacies to give discounts to Medicare beneficiaries, but drugstores contended that the president was still exceeding his legal authority. In July, Mr. Bush proposed issuing drug discount cards to elderly and disabled people on Medicare. In September the judge, Paul L. Friedman of Federal District Court here, blocked the president's plan, saying Mr. Bush had apparently "acted without legal authority." The judge also said federal officials had apparently violated a 1946 law by failing to solicit public comment on the plan. Today, Mr. Bush invited the public to comment on a revised version of his proposal submitted to the Federal Register for publication in the next few days. Under the original plan, Medicare officials said, the cards would have helped Medicare beneficiaries get discounts from pharmacies. Today, the administration said the government could extract discounts from both drugstores and drug makers. The Bush administration said it would help Medicare beneficiaries get discounts by pooling their buying power. The authority for the new plan, it said, includes the same statute it cited to justify its original proposal: a section of the Medicare law that requires the government to establish an advisory service to educate beneficiaries about Medicare, Medicaid and other health insurance programs. Medicare officials did not say why they believed Judge Friedman would accept that argument now after rejecting it in September. Whatever the legal merits of the case, the administration may reap some political benefits simply by fighting to help the elderly, who vote at higher rates than other age groups. After years of reliably tilting Democratic in Congressional races, the majority of voters 60 and older went for the Republicans in 1994, 1996 and 1998, then swung back to the Democrats in 2000. Some drug companies, including Pfizer and GlaxoSmithKline, are already offering discount cards to the elderly, promising to cut prices on medicines they manufacture. Thomas A. Scully, administrator of the Centers for Medicare and Medicaid Services, said the administration's cards would use "the best features" of the private cards. "The drug discount card program," Mr. Scully said, "will provide some necessary price relief to millions of seniors and disabled Americans, who are often the only ones to pay full price for their prescriptions." Tommy G. Thompson, the secretary of health and human services, said he hoped the discount cards would cut typical retail prices 15 percent to 25 percent or more. With the existing cards, savings average less than 10 percent for elderly consumers buying brand-name medicines in metropolitan areas, a recent study for Congress found. Judge Friedman's ruling in September came in a lawsuit by the National Association of Chain Drug Stores and the National Community Pharmacists Association. The two groups said requiring discounts would harm their members financially. The drugstores also said they would lose Medicare customers if they did not cut prices to the levels specified in the federal program. Both groups said today that the new proposal did nothing to cure the fundamental legal defects in the original proposal. "It's the old medicine in a new container," said John M. Rector, senior vice president of the National Community Pharmacists Association, which represents 35,000 independent pharmacies. S. Lawrence Kocot, senior vice president of the association of chain drug stores, said: "We still don't see where the administration is getting its legal authority." Members of the association include CVS, Rite Aid and Wal-Mart. The Bush administration said its new plan "differs in important respects from the initial proposal — for example, by requiring card sponsors to obtain substantial manufacturer rebates or discounts." The rebates, it said, could be shared with pharmacies, to help them defray the costs of the discounts. The administration said its plan could save consumers as much as $1.9 billion in 2004, rising to $2.6 billion in 2007. Drugs are standard therapy for many illnesses of the elderly. Medicare generally does not pay for drugs outside hospitals. This is widely seen as one of the biggest gaps in Medicare. The administration said the people most likely to use the new drug discount cards were the 10.8 million Medicare beneficiaries without insurance for prescription drugs.
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