Shopping for Drugs: 2007

Studies | Health

No. 293
Thursday, November 16, 2006
by Devon Herrick, Ph.D.


Executive Summary

Patients are increasingly being given the opportunity and responsibility to manage their own health care dollars.  The uninsured and others who pay for prescriptions out of pocket are looking for ways to cope with rising drug costs.  Seniors have new Medicare choices that include drug coverage.  Given the changing realities of the health care marketplace, every patient interested in saving money on drug therapy should consider a common-sense solution:  smart shopping. 

Patients can cut costs substantially by becoming aggressive consumers.  In fact, they can reduce the cost of some common drug therapies by more than 90 percent if they use the same buying techniques they routinely use when shopping for other goods and services. 

Consumers have never had more opportunities to obtain information about drugs.  A patient with a prescription can find a range of prices by clicking on a few Internet pharmacy Web sites.  The Internet also makes it easy to look up information on government and private programs that assist elderly, low-income and disabled patients. 

Seniors can begin using smart shopping techniques in selecting a prescription drug plan (Medicare Part D) or Medicare Advantage managed care plan.  Many Medicare managed care plans include drug coverage, but some limit coverage of brand-name drugs, and some require seniors to pay some 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 avoid the standard coverage gap between $2,400 and $5,451 in drug expenses.  Thus, seniors should select the plan that meets their individuaneeds at the lowest cost.

Recent developments in the market for prescription drugs may offer the most promising opportunities for patients to save.  For example, consumers in 27 states now benefit from a new $4 for a 30-day supply of one of 150 different generic prescription drugs at Wa-Mart.  Riva-competitor, Target, has announced an intent to match Wa-Mart's prices.  As more patients begin comparison shopping for drugs, more retailers wilcompete to win their business which wildrive prices lower. 

While these generic drug programs wilhelp many consumers lower their drug bills, many patients take medications that are not available in generic form.  They can stiluse the smart-shopping tools outlined in this study to become savvy consumers of prescription drugs:

Price Comparisons.  Many people assume drug prices are uniform and do not bother to comparison shop.  In fact, drug prices vary considerably.  One survey found prudent shopping among locapharmacies saved consumers almost 10 percent on brand-name drugs and a whopping 81 percent on generics, on the average. 

Drug Substitution.  When physicians prescribe drugs, patients should ask if cheaper alternatives are available; they often are. 

Bulk Buying.  All supermarket patrons know that choosing larger packages usually lowers the unit cost.  The same is true for drugs.  Pills purchased 90 or 100 at a time usually sell for much less per dose than quantities bought 30 at a time.  This is especially true for generic drugs ordered by mail. 

Mail-Order Pharmacies.  Although drugstore chains stilselthe most drugs, mail order pharmacies are gaining ground and now account for about 17 percent of the retail drug market.  Mail-order and Internet pharmacies offer the best deals on prescription drugs for patients with chronic conditions.  Some patients even buy drugs from other countries over the Internet, although the practice is illegal and the drugs may not be safe.

Pill Splitting.  Patients can purchase many medications in doses double the prescribed amount and split them in half.  Often, pharmacists will split the pills for them.  Savings of 30 percent to 50 percent are not uncommon because many medications are sold for about the same price regardless of dosage.   

Generic Medications.  For most patients, generic medications work as welas brand-name drugs and cost 20 percent to 80 percent less.  The average cost for a generic prescription was $29.82 in 2005, compared to $101.71 for branded medications. 

Over-the-Counter Drugs.  As an alternative to prescription drugs, patients may find that an over-the-counter (OTC) drug does just as wel.  Americans buy more than five billion OTC drug products each year - 60 percent of aldrugs used.  Today, consumers have access to a market with more than 100,000 different OTC drug products; more than 600 of them were previously available only by prescription. 

PharmaceuticaCompany Assistance Programs.  Many drug companies offer discount card programs to assist disabled, low-income and/or elderly patients with the cost of drugs.  For example, Together RX Access, a joint program run by severadrug companies, offers savings of up to 40 percent on more than 150 different drugs.  Low- to moderate-income families qualify for the program.

Medicare Drug Plans.   Seniors now have an opportunity to combine smart shopping techniques with the new Medicare drug plan, using the information available at Medicare.gov.  The Web site allows seniors to calculate their out-of-pocket costs under different plans for the specific drugs they take for chronic conditions, allowing them to pick the plan that best meets their individuaneeds.  In addition, the new prescription drug benefit offers financiahelp for low-income seniors.

State Drug Assistance Programs.  Almost three-fourths of the states have created some type of drug assistance program for the elderly, low-income patients and/or people with disabilities.  More than half of the states provide funds to help seniors pay for medicine, and nine states offer drug discount programs that allow seniors to purchase drugs at prices below retai.

How much can patients expect to save by using these techniques?  The NCPA reviewed prices of Web-based pharmacies during 2006 and found they varied widely.  Take the cardiovascular drug, Tenormin, for example: 

  • The NCPA survey found that the price of 100 (50mg) doses of Tenormin ranged from $139.74 at Drugstore.com to $125.49 Costco.com. 
  • But patients could save nearly 90 percent over the lowest cost brand-name drug by switching to the generic alternative, Atenolo; 100 doses of the generic drug ranged from $19.98 if purchased through Walgreens.com to $8.29 at Costco.com. 
  • Finally, consumers could save another 32 percent (from $8.29 to $5.65) by buying larger, 100mg pills and splitting them in half.

Therefore, smart buying lowered the potentiaoveralcost from a high of $139.74 to a low of $5.65 - a 96 percent saving. 

For another example of potentiasavings, consider the heartburn drug, Nexium:

  • If purchased in smalquantities - 30 capsules at a time - from Drugstore.com, Nexium costs about $493.33 per 100 doses; however, a shopper buying from Costco.com would pay $434.67 for 100 capsules, a 12 percent saving. 
  • Buying the generic equivalent of a therapeutic substitute, such as Omeprazole, would only cost $65.79. 
  • Furthermore, Prilosec OTC, a branded form of the generic drug Omeprazole, is now available over the counter; a savvy consumer opting to pay $61.88 for a 100-day supply from Drugstsore.com would save 87 percent off the most expensive option.

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