I am confused about how the new Medicare discount prescription cards
cards work. How do the discount card providers make a profit? How does
my local drug store make their profit? What is the process?

http://access.adobe.com/perl/convertPDF.pl?url=http://www.medicare.gov/Publications/Pubs/pdf/11062.pdf
might be helpful...not sure.  It's a long document though, give it a
good chance to load.

This isn't a government publication, so its less authoritative, but it
presents one alternative card in very simple terms.
http://www.seniorcopaycard.com/prescription_drug_program.html

Be slective, however, when choosing one. I know there are many
different prescription discount cards out there, and like health
insruance, they all have their limitations.