Novartis “CareCard” Discount Plan Offers $5 Enrollment Fee To Pharmacies

Novartis will pay pharmacists $5 per enrollee for each senior they sign up to participate in the "CareCard" discount program.

The enrollment fee is one of the pharmacy-friendly features Novartis is building into the discount card program. Novartis is also making the program retail-only and relying on a third-party administrator from outside the PBM sector.

The CareCard program received a tempered endorsement from the retail pharmacy groups. While the National Association of Chain Drug Stores and the National Community Pharmacy Association both noted their opposition to discount card programs in general, they praised the Novartis program for putting value on retail pharmacy services.

Novartis is emphasizing the pharmacy focus of the program as a distinguishing feature from GlaxoSmithKline's "Orange Card" discount plan. The basic design of the CareCard plan, including eligibility requirements and the discount formula, follows the model set by GSK (¹ (Also see "GSK "Orange Card" Price For Seniors Is 25% Off Wholesale Acquisition Cost" - Pink Sheet, 8 Oct, 2001.), p. 6).

The Orange Card program emphasizes the physician as the focus for patient enrollment. GSK is using Express Scripts to administer the plan, and will be using mail order.

Novartis' focus on retail pharmacy suggests a different underlying commercial objective behind the plan.

For GSK, the Orange Card offers its sales force a method to reach physicians during a period of limited new product launches. In its first discussion of the program with the financial community, GSK noted that it is already helping the company with hard-to-reach doctors (² (Also see "GSK "Orange Card" Helps Sales Reps With "Tougher" Physicians, Firm Says" - Pink Sheet, 29 Oct, 2001.), p. 12).

Novartis, which has launched eight new molecular entities over the past two years, has no shortage of news to use to reach prescribers. The company may instead see a priority in opening up a retail channel outside of the PBM sector.

The company's most important emerging franchise is the Diovan (valsartan) antihypertensive family, which competes against Merck's Cozaar (losartan) (³ (Also see "Diovan CHF Claim: Use As Substitute For ACE Inhibitor Supported By FDA" - Pink Sheet, 5 Nov, 2001.), p. 26). Diovan and Lotrel (valsartan/amlodipine) are presumably at a disadvantage in the Merck-Medco distribution channel. Medco offers its own senior discount program under an agreement with Reader's Digest.

Novartis says an "independent third party" will handle the financial administration of the CareCard. The company will secure pharmacy participation and negotiate a dispensing fee for pharmacists.

The independent administrator will also ensure that the CareCard infrastructure "will serve as a viable foundation for other pharmaceutical companies to integrate their own programs."

The CareCard is scheduled for launch on Jan. 1, 2002 (the same date as the Orange Card). Other pharmaceutical companies interested in launching their own programs from the CareCard foundation would have to act swiftly to be ready by that date.

The CareCard (and the Orange Card) are available for seniors whose annual income is less than 300% of the federal poverty level. Novartis estimates about 80% of Medicare enrollees who lack drug coverage, roughly 10 mil. people, will qualify.

The Novartis and GSK programs are both offering 25% off wholesale acquisition cost, supplemented by discounted pharmacy prices that are estimated to produce 30%-40% total savings at retail.

Like GSK, Novartis is not publishing discounted prices, but instead describes sample discounts. According to the company, the average cost of a 90-day supply of Diovan will be reduced by 30%, from a current retail price of $139 to $98.

The CareCard is the latest indication of the continuing interest in Rx drug discount programs as a short-term alternative to a full Medicare prescription drug benefit. The Bush Administration is planning to publish a proposed rule to create a Medicare discount card program (⁴ (Also see "HHS Medicare Rx Card Rulemaking Planned: Fall-Back For '02 Drug Debate?" - Pink Sheet, 15 Oct, 2001.), p. 3).

The deeper significance of the Novartis/GSK discount programs may be the willingness of the companies to trade discounts for expanded use by seniors. Novartis and GSK are out in front of most of the industry in preparing investors for the prospect that a Medicare drug benefit will involve discounts (⁵ (Also see "Rx Discounts Are “Price Industry Must Pay” For Medicare Benefit – Novartis" - Pink Sheet, 5 Nov, 2001.), p. 24).