Government Negotiated Drug Prices Not Needed; Smart Shopping Can Cut Costs Better


NCPA Study Shows Aggressive Consumers Can Save Up to 90 Percent

DALLAS (November 16, 2006) – As a Democratically-controlled Congress convenes next year a likely agenda item for newly elected Speaker Nancy Pelosi (D-CA) is to have Medicare negotiate prescription drug prices, similar to arrangements made by Medicaid and the Veteran's Administration. Yet according to a new study from the National Center for Policy Analysis (NCPA), "Shopping for Drugs: 2007," the most effective way to lower drug costs is for seniors to become smarter shoppers.

"Seniors can save a lot of money if they shop for drugs the way they shop for bread," said NCPA Senior Fellow Devon Herrick who authored the report. "Savvy shoppers can most often do better than Medicaid, the VA or by shopping in Canada."

The NCPA study discovered that in most cases, patients can significantly lower their drug costs by comparison shopping, buying in large quantities and pill-splitting, or by purchasing generic or other lower-cost therapeutic substitutes. In fact, using these techniques they can reduce the cost of some common drug therapies by more than 90 percent. For example:

  • According to a review of prices from Web-based pharmacies during 2006, the price of 100 (50mg) for the cardiovascular drug, Tenormin, ranged from $139.74 at Drugstore.com to $125.49 at Costco.com.
  • Patients could save nearly 90 percent over the lowest cost brand-name drug by switching to the generic alternative, Atenolol; 100 doses ranged from $19.98 at Walgreens to $8.29 at Costco.
  • Consumers could save another 32 percent (from $8.29 to $5.65) by buying larger, 100mg pills and splitting them in half.
  • Smart buying lowered the potential overall cost by 96 percent – from a high of $139.74 to a low of $5.65.

According to the study, seniors can also use smart shopping techniques in selecting a Medicare prescription drug plan. Many Medicare managed care plans include drug coverage, but some limit coverage of brand-name drugs, and some require seniors to pay a portion of the costs. Similarly, Part D drug plans differ in the premiums charged, the drugs they cover and the amount of cost sharing required. Some waive the deductible and avoid the coverage gap between $2,400 and $5,451 in drug expenses. Thus, the study says, seniors should select the plan that meets their individual needs at the lowest cost. Information about all these plans is available online at www.medicare.gov.

"Consumers have never had more opportunities to obtain pricing information about their drugs or the ability to turn that knowledge into savings," said Herrick. "As we've seen with Wal-Mart's $4 generic drugs, when pharmacies have to compete for individual consumers' business in the information age, costs go down and quality goes up."