Medicare beneficiaries without prescription drug coverage could save an average of 17.4 percent on their out-of-pocket costs by enrolling in the government's new drug discount program, according to a recent study published April 14 on the Health Affairs website. Enrollment in the program, established under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173), starts in May.

Using data from 2000, researchers found that the average Medicare patient without drug coverage spent $672 on prescription medicines in 2000 and would save about $117. The estimate doesn't account for card enrollment fees or any changes in drug use in response to lower prices. The study showed greater savings from generic medicines (41 percent) than for brand name drugs (14 percent), but brand names will account for more of the total savings ($83 of the total $117 in savings). Researchers also estimate that the lowest-income seniors will experience the most benefit. Their average savings will represent 1.8 percent of income, compared with 0.2 percent of income for the wealthiest beneficiaries. Lower-income seniors will also benefit from an annual $600 subsidy that is not included in the savings estimates.

"Our results indicate that prescription drug discount cards could modestly reduce Medicare beneficiaries' out-of-pocket drug spending before expanded coverage begins in 2006," said study author Juliette Cubanski from Harvard University. "However, the wide variation in individual aggregate savings that we estimated demonstrates the uncertainty in assessing the overall value of the program to Medicare beneficiaries."

The researchers said individual savings from the Medicare-approved discount cards will depend on many factors, including the number, type, and duration of medications taken; initial out-of-pocket drug costs, where prescriptions are filled; discounts offered on drugs consumed; and retail or mail-order prices that would otherwise have been paid.

The study, "Savings From Drug Discount Cards: Relief For Medicare Beneficiaries?" is available at http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.198v1/DC1.