The Centers for Medicare & Medicaid Services will publish a guidance in January on how sponsors of Medicare-endorsed drug discount cards would fulfill pricing requirements under the program.

The "interpretative guidance" will address a requirement stipulated in the final rule that sponsors provide 30 days notice before dropping a drug from the formulary or increasing its price.

"CMS intends to provide interpretive guidance in January 2003, particularly concerning the 30 day prior notice policy, to facilitate all relevant parties receiving drug and price data and such data being posted on the web site in a correct and timely manner," the agency says in a draft "Solicitation for Applications."

The final rule on the Medicare-Endorsed Prescription Drug Card Assistance Initiative also stated that sponsors would not be allowed to drop a drug or increase its cost for 60 days, "starting on the first day of the program's information and outreach campaign" (¹ Also see "Medicare Rx Card Sponsors Must Disclose Rebate Info Under Final Rule" - Pink Sheet, 2 September, 2002., p. 3).

"CMS intends to limit the circumstances in which the 60-day change policy could be longer due to the 30-day prior notice policy," the draft solicitation states.

The draft appears on the CMS web site; the agency is accepting comments on it, and intends to publish a final solicitation for applications on Jan. 7.

The draft includes a model endorsement agreement that endorsed card sponsors would be required to sign. In addition to attesting that their card program would provide discounts on at least one brand or generic drug in a list of therapeutic classes, sponsors are also asked to complete a checklist showing which of the drugs most used by Medicare beneficiaries and the highest cost drugs would be discounted.

The list "represents the non-overlapping list of the top 100 drugs by use and the top 100 drugs by cost in 1999, according to data collected from the 1999 Medicare Current Beneficiary Survey," the draft says.

The final rule noted that the therapeutic "categories listing has been updated to reflect the top prescription drug utilization and spending data collected through the" 1999 survey, but did not include the checklist.

Applicants will also have to complete a checklist on the drug-related pharmacy services they will offer. The final rule specified that routine pharmacy counseling and services related to the filling of prescriptions would be considered part of a sponsor's endorsed plan while non-drug related services "e.g. eye glasses and travel services" would not be endorseable.

The draft solicitation also includes a timeline for CMS review of sponsor applications and a start date for beneficiary enrollment.

After publication of the solicitation, CMS plans to hold a "pre-application conference" on Jan. 16 with those intending to apply to answer questions about the process. The agency will also issue guidelines for sponsors in January on appropriate "information and outreach materials" for their card programs, should they secure endorsement.

Final applications are due March 7. CMS plans to review the submissions by the end of April and announce the endorsed programs on May 1. Sponsors will be allowed to distribute promotional materials beginning Aug. 19. On Sept. 30, 2003, beneficiary enrollment will start and discounts will be effective.

CMS notes that it plans to "provide basic information about each of the endorsed programs" to the public beginning in September 2003. The agency has "retained a contractor to conduct research to develop meaningful and useful information for Medicare beneficiaries about this initiative," the draft says.

A legal challenge to the program could halt its progress. D.C. district court Judge Paul Friedman is scheduled to hear oral arguments (one hour for each side) on Jan. 29 in a suit brought by pharmacy groups.

The National Association of Chain Drug Stores and the National Community Pharmacists Association filed a motion for summary judgment Nov. 21 that would enjoin CMS from implementing the program. The groups won an injunction against an earlier version of the program by arguing that CMS did not have the authority to create it (² Also see "HHS Lacks Authority To Create Medicare Rx Discount Card Plan, Judge Rules" - Pink Sheet, 10 September, 2001., p. 3).

The motion for summary judgment argues that the amended program is not materially different and should, therefore, be deemed "unlawful."

CMS Rx Discount Card: Pricing Guidance In Jan., Applications Due March 7

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