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As public pressure mounted on the pharmaceutical industry to reduce its prices a few years ago, drugmakers quietly began rolling out discount cards for millions of low-income seniors -- generally, anyone enrolled in Medicare who takes home less than $28,000 a year. Few seniors noticed at first -- and consumer groups were skeptical. What the elderly and retired really needed, they said, was a Medicare prescription-drug benefit, which Congress has been reluctant to provide even as it's considering tax cuts and authorizing higher spending on defense and national security. Something is turning out to be better than nothing, however. GlaxoSmithKline (GSK ) and Novartis (NVS ) have introduced discounts of roughly 25% off the retail-pharmacy price for most of their drugs, while Lilly (LLY ) and Pfizer (PFE ) offer programs that let seniors who meet certain income tests get medicines for $12 to $15 per month per drug. "WAKE-UP CALL." "We've done focus groups with seniors on fixed incomes who say the discount cards are becoming a big help," says Dilip Phadnis, founder of Rowin Group, a pharmaceutical-industry consulting firm in Maywood, N.J. "In many cases, these are seniors who've been choosing between food and rent or medicine." Consumer groups agree. "The cards are no substitute for Medicare drug coverage, but they're proving helpful in the interim," says John Rother, AARP's director of policy and strategy. While the industry says it's offering the discounts out of compassion, the companies involved may have other motives: The cards are attracting new customers who, until now, couldn't afford medicines for chronic illnesses that often require lifelong treatment. The cards also foster loyalty to a particular drug -- an indirect benefit for the companies that could prove valuable if Congress ever agrees to a Medicare drug benefit. "The discount cards are a bridge," says Robert Perkins, executive director of Together Rx, which last year created a discount-card sponsored by seven major drugmakers. No doubt the cards also improve the drugmakers' image, says an executive of one senior citizen group: "I think these companies got a wake-up call a few years ago. They had to do something to lower their prices." TARGETING THE NEEDIEST. The cards aren't widely advertised by the participating companies, which so far number at least 10. But the industry says it's eager to sign up new members. Enrollment is free -- and Together Rx relies on the honor system: It doesn't require proof of income to establish eligibility, even though the program's published guidelines list its low-income requirements. "The 622,000 people who have enrolled so far have saved more than $55 million on their prescriptions," says Perkins. "Our goal is to have 1.5 million members by the end of 2003 and total savings of $200 million by then." Together Rx and other independent drug companies have designed their plans to reach the least-wealthy 10 million to 11 million of the 40 million people who use Medicare. These are the people most in need who aren't covered by Medicaid or by state programs for the poor. New York, Massachusetts, and New Jersey, among other states, already provide prescription discounts for seniors that exceed the drug-company plans. HARD TIMES. The states, however, are facing budget shortfalls thanks to the weak economy. And that could make the industry's discount plans a lifesaver for some seniors. Massachusetts and New Jersey, for instance, are likely to cut back on their prescription-drug coverage, while New York has raised the co-pays and deductibles on its prescription program by about 10%. "We've been able to avoid a significant cutback, but other states face sharper cuts," says Bill Ferris, a lobbyist in Albany for the New York chapter of the AARP. The discount cards aren't the ultimate protection against the escalating cost of prescription drugs. However, considering that busloads of seniors making road trips to Canada to buy cheaper medicines these days, they're a step in the right direction.

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