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David Sirota, Christy Harvey and Judd Legum are with the Center for American Progress a nonpartisan research and educational institute.

Just two days after President Bush signed the drug industry-backed Medicare legislation into law, the White House announced the details of the Medicare discount drug card program. In this new program, Medicare will contract with private, pharmaceutical benefit management (PBMs) companies to endorse existing discount cards. The cards have been assailed for not guaranteeing any price discounts, while potentially driving millions to these PBMs. So why, then, is the President so adamant about the cards?

For one thing, he has extremely close financial, professional and political ties to AdvancePCS, the company that stands to make a windfall off the program. Specifically, Bush is close friends with David Halbert,CEO of AdvancePCS. As the Fort Worth Star-Telegram reported on 8/18/02 "before starting what would become AdvancePCS, David Halbert helped clean up a deal with Harken Energy that had prompted an SEC investigation of George W. Bush." After the investigation, Halbert then invited Bush to become one of the original investors in AdvancePCS, a transaction that made the President up to $1 million.

Soon after assuming the Presidency, Bush paid Halbert back in kind, soliciting his help in writing the 2001 drug discount card proposal that is now part of the new Medicare law. Halbert brags about the complicity, saying the White House specifically asked him to help write parts of the plan. As the Fort Worth Star-Telegram reported on July 18, 2001, "AdvancePCS has been working with the White House to create a nationwide private discount card program... David Halbert, AdvancePCS' chief executive, said the Bush administration contacted his company about two months ago." When Bush announced the original plan, "Halbert stood next to the president in the Rose Garden" and said "it was quite an experience."

How Bush's Friends Will Make A Killing, Part I

The drug discount cards may not be great news for seniors - but they are terrific news for giant PBMs. AdvancePCS, along with four other companies, controls 80 percent of the PBM market and up to 90 percent of the mail-order pharmacy business. These companies will be hired by drug plans to negotiate with drug makers, issue discount cards and line up networks of pharmacies - all without a guaranteed price savings for seniors and with collateral damage to local pharmacies.

As Bloomberg News wrote last January, the system is designed to steer "patients away from pharmacies and into mail-order businesses run by pharmacy-benefit managers such as Express Scripts Inc. and AdvancePCS."

AdvancePCS has already faced lawsuits over market manipulation in the past, "by failing to disclose the extent of their financial ties with manufacturers." And the AARP sued them last year, accusing "AdvancePCS in court of not only 'illicitly diverting' seniors from its drug-discount plan, but of actually putting them at risk for potentially dangerous drug interactions."

Making A Killing, Part II

Refusing To Monitor PBM Prices

Despite these lawsuits, the White House is further rewarding AdvancePCS by refusing to require that they pass along any savings on drug prices to seniors. As The New York Times reports, while HHS "will monitor the prices of prescription drugs bought by Medicare beneficiaries, sponsors of drug discount cards will be allowed to change their prices 'and the list of covered drugs on a weekly basis." The administration stated, "we have chosen not to establish minimum threshold levels for price concessions." In August, the Bush administration pushed Congress to "kill a provision of the Senate bill" that forbade drug companies to up prices more than once a month, saying "price stability is not a requirement of the drug benefit." Prescription prices have gone up 17 percent for four straight years in a row. The bottom line: Discount cards will bring profits to PBMs will little real benefit to seniors. Even William Novelli, head of the AARP which supported the bill, admitted the cards would not make a significant difference for seniors: "I don't think that drug card will be the world's most thrilling event."

The Long Relationship Between Bush And Halbert

Halbert was also deeply involved in catapulting George W. Bush into the political spotlight. According to the Center for Public Integrity, "in 1986... Harken's CEO introduced Bush, the company's new director and consultant" as well as son of then-Vice President George Bush" to a little startup health-care company. He put in a modest investment, and a few years later walked away with a six-figure windfall." That company was David Halbert's, and eight years later, when Bush was running for Texas governor and scrambling for campaign cash," the company came through. "In 1994, when the company was known as Advance Health Care and Bush was making his first run for Texas governor, those insiders gave him $23,700 for his first gubernatorial run, including $14,500 from Halbert, his brother, Jon, their father and their wives."

Thus began Halbert's investment in the Bush political machine. And 10 years later, he's got to be pretty pleased with his return.