Finding the Right Prescription: How to Save on Medications
- Joseph Slife with Matthew Pryor Sound Mind Investing
- 2010 8 Nov
Driving to get the medicine, Bill couldn't resist the temptation to do one more comparison. He stopped in at a third pharmacy. "Mr. Kelley, do you have one of our discount cards?" the pharmacist asked. "If not, we can set you up with one — and, let's see, that prescription will come to $11.05." Bill was grateful the first pharmacy didn't have the medicine on hand.
Not all prescription medications have such a large price variation, but Bill's experience(a true story) shows it can pay to shop around.
Consumers increasingly have incentives to comparison shop. In many instances, insurance plans are raising participant co-pays for prescriptions. Also, workers with high-deductible Health Savings Account plans are facing more out-of-pocket costs before insurance coverage kicks in. And seniors with Medicare Part D have to be prescription-cost conscious to avoid falling into the so-called donut hole (i.e., the gap in coverage during which Medicare recipients have to pay 100% of prescription costs).
The good news is that comparison shopping for prescription medications is getting easier all the time. It's now common for health insurers (who have an incentive to keep prices down) to provide websites that allow plan participants to research prices at both area pharmacies and web-based drug stores. In addition, about a dozen states maintain their own "price registry" sites for prescription drugs.
Of course, you can do your own comparisons simply by calling a few local pharmacies as Bill Kelley did. But you also can go a step further by comparing those quoted prices against online pharmacies — such as Costco.com and DrugStore.com — that post their drug prices online.
Don't expect to find huge price variations for every prescription, however. A mid-September SMI study of prices for eight commonly prescribed medications found a price difference in most cases of only 2.5%-3% across seven pharmacies. But we did find a 13% price difference for the pain compound Hydrocodone/Acetaminophen and a 43% spread in the prices quoted for the common antibiotic Amoxicillin.
Much larger savings presented themselves when we were able to substitute a generic drug for a brand name. Generics are simply copies of brand-name drugs that are the same in "safety, strength...quality, [and] performance characteristics," according to the U.S. Food and Drug Administration. What isn't the same is the price.
While the best price we could find for the heartburn medication Prevacid (30 mg) was $165.97 for a 30-day supply, we found the generic version (lansoprazole) for almost exactly $100 less — $65.79, a savings of 60%. Likewise, the best price we found for a 30-day supply of the osteoporosis drug Fosamax (70 mg) was $83.05. We located the generic version (alendronate sodium) for just $8.65 — a savings of almost 90%!
New generic versions of name-brand drugs are being released each month, so it's a good idea to check with your doctor or pharmacist to see if a medication you're already taking has been released as a generic. Also, the FDA updates its generic drug listing monthly here.
Albertson's, CVS, Kroger, Rite Aid, Target, Walgreens, and Walmart all have programs that sell certain generic prescriptions at rock-bottom prices — as low as $4 for a 30-day supply in some cases. Warehouse clubs such as Costco, Sam's, and B.J.'s offer low-cost generics too — and you don't have to be a club member to order from their pharmacies. A few grocery chains — such as Publix (Southeastern states) and Meijer (mostly in the Midwest) — even offer certain generic antibiotics for free. You certainly can't beat that price. (A partial listing of low-price generic-drug programs can be found here.)
Here are more ideas for holding down prescription costs:
- Ask for samples. Doctors often have prescription-drug samples provided by pharmaceutical companies. Your doctor may be able to give you a free short-term supply of a new prescription.
- Buy online. Sure, it's good to have a relationship with a local pharmacist, but if you just need to refill a maintenance medication, you may be able to save significantly by buying online. Even the online versions of local pharmacies such as CVS and Walgreens sometimes have lower prices than their own local stores — and you can have the medicine shipped directly to you or pick it up at your nearby pharmacy. Store pick-up may be important to customers who want to be sure a local pharmacist is aware of their full medication regimen.
- Buy in bulk. If you take certain medications routinely, find out if you can get a better deal by buying a 90-day supply rather than a 30-day supply. The cost savings (if any) aren't likely to be huge, but every little bit helps.
- Join a loyalty program: Like grocery stores and booksellers, many pharmacies are adopting loyalty-card programs that offer discounts for cardholders. The goal of the pharmacies, of course, is to keep you coming back rather than take your business elsewhere.
Get prescription assistance: Many drug companies participate in assistance programs that provide medications at low-cost or no-cost to people without health insurance or drug coverage. You can learn more at RxAssist.org, pparx.org, and NeedyMeds.org. Also, some state and local governments, as well as certain charities, offer prescription-discount cards to people with low incomes.
BUYING OUTSIDE THE U.S.?
Many brand-name prescription drugs cost less outside the U.S. because of government-enforced price controls in other nations. But strictly speaking, importing medicines from other countries is illegal, although the U.S. Customs Service is lax about enforcing the law.
The U.S. Food and Drug Administration makes a slight exception to the no-importation law for prescription purchases in Canada. To be within the law, such transactions must be made in person (i.e., not online), and the buyer must have a valid U.S. and Canadian prescription. In practice, this means only U.S. residents who live near the border and have the requisite double prescriptions will find buying medicine in Canada convenient and legal.
Pressure to change the drug importation law — at least in the case of prescription-drug purchases from Canada — appears to be increasing. The governments of several U.S. northern-border states (New Hampshire, Minnesota, Washington, and Wisconsin) have effectively defied the federal law by encouraging their state employees to buy medications from Canadian websites, according to Consumer Reports. In 2009, the U.S. Senate passed a bill that would have allowed U.S. residents to make purchases from Canadian online pharmacies, but the measure never received final approval.
© Sound Mind Investing
Published since 1990, Sound Mind Investing is America's best-selling financial newsletter written from a biblical perspective.