The full text of this study is available in Adobe Acrobat PDF format.

Critics wasted no time in pronouncing the Medicare prescription drug discount card program a failure. The evidence, however, proves otherwise.

The new Medicare discount card program can help millions of seniors and disabled people save money on their prescriptions. Prices available through Medicare-approved cards are 5–50 percent lower than prices offered by well-known discounters, including AARP, Costco, and drugstore.com.

The neediest seniors stand to save even more. For them, discounts negotiated by the card sponsors are only part of the story. Low-income seniors without other drug coverage also receive a $600 taxpayer subsidy and special discounts made available by pharmaceutical manufacturers. Between June and December 2004, these beneficiaries could save between one half and three quarters of their prescription cost through this public-private partnership.

Despite the potentially large savings available through Medicare discount cards, initial enrollment was disappointing. That might have been expected: Seniors are unfamiliar with this novel program, and a storm of bad press may have discouraged some seniors from looking into it. This study documents the need for better consumer information, particularly on special discounts offered by pharmaceutical companies that can provide very generous savings to many low-income beneficiaries. The failure to make that information transparent and easy to access must be overcome if this program is to live up to its full potential.

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute and an adjunct professor in the School of Public Health at the University of North Carolina at Chapel Hill.

Ximena Pinell is a research assistant at the American Enterprise Institute. Her work includes a variety of projects on health system reform.