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October
31, 2005
Minimizing
Your Prescription Drug Costs
Americans
spend over $150 billion per year on prescription drugs.
The average American gets 10 prescriptions per year,
and over 10% of their total healthcare expenses are
for prescriptions. Starting in 2006, no plans
that are qualified to work with health savings accounts
may cover prescription drugs as an insured benefit
until after the deductible is met. So for HSA
owners, one of your biggest health expenses could
be for prescription drugs. Here are some ways
to reduce those costs.
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Generics
A report
was published this week by Express Scripts Inc., a pharmacy
benefit manager, indicating that increased use of generic
drugs would save consumers $24 billion in 2005. Generic
drugs cost an average of $60 less per month, than brand name
drugs.
It is
important to understand that brand name drugs often have
little or no benefit over older generic versions.
A prime example is Prilosec, a heartburn medication whose
patent was scheduled to expire in April of 2001. Prilosec
consists of two "isomers", a right-hand version
and a left hand version. Studies showed an 87% success
rate for this drug. AstraZeneca, the manufacturer, decided
to offer a newly patented single isomer version called Nexium,
which showed only fractionally better results with a 90% success
rate.
A $500
million marketing campaign ensued, aimed at both physicians
and consumers, to convince them that Nexium is "state-of-the-art".
AstraZeneca now sells over $3 billion worth of pills annually,
at $120 per box. This is a drug that is essentially
only a repackaged version Prilosec, which sells for about
$20 per box.
When your
doctor is prescribing a drug, make sure to ask him if there
is any benefit to taking a brand name over a generic, and
let it be known that you'll be paying for the prescription
out of your own pocket.
Drug
Discount Programs
Pharmaceutical
prices are a lot like hospital prices - very few people actually
pay the listed retail price. There are numerous drug
discount cards available on the market, which provide savings
that average 15% to 40% below retail at participating pharmacies.
Typically, most of the chain pharmacies (CVS, Eckerd, Walmart,
Kroger, etc.) participate in these plans.
Many insurance
companies include discount cards as an additional benefit
that comes with their coverage. Because these cards
are not considered to be insurance, they can be offered with
an HSA-qualified plan. Insurance companies that provide
Rx discount cards with their HSA plans include American Medical
Security, Anthem Blue
Cross Blue Shield, Time
/ Assurant, United Healthcare,
Unicare, and World.
Stand-alone
drug discount plans are also available to anyone with access
to the internet. We've found the average cost of these
discount plans to be around $7 or $8 a month. One
I found that seems like a particularly good value is called
the Freedom
Benefit Card. It costs $39.99 per year for the
family, and should cut your generic prescription costs by
60% at over 50,000 participating pharmacies in the U.S.
Use these links to get
a drug price and find
a pharmacy.
HSA
for America has also secured for its members
(and readers of this newsletter) a free discount Rx card,
called Drug Card America. To enroll online, click
here. You may want this card in addition to any
other cards, since the card that offers the best deal usually
varies, depending on the drug.
If you're
looking for a plan that has co-pays for prescription drugs
rather than only discounts, American Health Care Options offers
a four-tiered prescription card program where you pay $10,
$20, $50, or a special discount price for generic and brand
name drugs. You can check the tier of any drug you're
interested in, and apply online at http://www.ahco.biz/index.cfm?id=14593.
The cost of this plan is $19.95 per month for an individual,
or $29.95 for a family.
Mail
Order
If the
need for a prescription is not urgent, or if you are on long-term
medication, mail order is almost always a less expensive way
to buy prescription drugs. It is generally cheaper to
get a 90-day supply because of a volume discount. I
recommend asking your physician to write the prescription
for a 3-monthly supply plus three refills. This will
get you a year's worth of drugs, with only one shipping fee.
One company
that has good prices is Save Now Discount Pharmacy.
They have a 'no insurance' business model, and have been able
to reduce their prices by eliminating the cost of dealing
with insurance companies. They also post prices online,
so it's easy to compare. Unfortunately, they are only
licensed in 13 states at present, but they will apparently
be expanding soon. You can check them out at www.savenowdrugs.com.
Importing
Prescription Drugs from Canada (or wherever)
The city
of Boston, the city of San Francisco, the state of Wisconsin,
and the State of Minnesota all use a company called Total
Pharmacy Care to give their citizens access to international
mail-order pharmaceuticals. This is a fully licensed
pharmacy in Calgary, Alberta under the Provincial and Canadian
Health Ministry regulations, yet they also give access to
drugs from countries other than Canada.
Officially,
re-importation of prescription drugs by anyone other than
the drug's manufacturer is a violation of federal law.
But FDA enforcement guidelines allow agents to exercise discretion
for drugs imported for personal use. According to the
guidelines, "FDA personnel may consider a more permissive
policy" in cases where an individual seeks to import
no more than a three month supply of a product that does not
appear to pose an unreasonable risk, if the individual affirms
in writing that it is for personal use and provides the name
and address of the U.S. doctor supervising their treatment.
Advocacy
groups cite these guidelines as proof that re-importation
is legal. But in a February 2003 letter, the FDA's Associate
Commissioner, Thomas Hubbard, said the guidelines have been
misinterpreted. They were meant to allow FDA agents
discretion in allowing U.S. citizens access to medicines for
serious conditions that were unavailable or hard to find in
the states, not to allow international comparison price shopping.
Nevertheless,
thousands of U.S. citizens have found they can save money
by buying their drugs from outside the country. Drug
price comparisons from several countries (Canada is not always
the cheapest!) can be found at Total
Pharmacy Care. Keep in mind that since this
importation is technically illegal (though rarely enforced),
it may not be proper to use your HSA to pay for prescriptions
purchased this way. Talk to your accountant if you decide
to go this route.
Combining
a discount card like The
Freedom Benefit Card offered by No Borders USA coupled
with Canadian/Overseas mail order program through Total
Pharmacy Care should provide a total package with
great savings.
Avoiding
Prescription Drugs
The people
who spend the least on prescription drugs are those who rarely
take them. The need to take an antibiotic for an acute
infection may seem fairly expensive, but it is nothing compared
to the cost of taking a medication for the rest of your life.
Unfortunately, by age 45 over half of all Americans are on
a regular prescription medication, and by age 65 nearly half
are on three or more prescriptions during any given month.
Most of this is entirely preventable.
Some of
the biggest selling drugs are to treat elevated cholesterol,
hypertension, and acid reflux. A paper published this
year in the American Journal of Clinical Nutrition entitled
Origins and evolution of the western diet: Health implications
for the 21st century, explains how these and other common
health issues did not exist for our hunter-gatherer ancestors,
and how diet is the root cause of so many of the health problems
people in our culture experience.
The author
is Dr. Loren Cordain, one of my professors at Colorado State
University. In a nutshell, he shows why the healthiest
diet is one based on fruits, vegetables, fish, and lean meat.
Foods to be avoided or limited include added sugars, shortening
and other processed vegetable oils, grains, and legumes.
These are all foods that did not exist in our diet prior to
about 10,000 years ago, and are thus foods that we are not
genetically adapted to eat. If you're interested, you
can download a copy of this paper at:
http://www.thepaleodiet.com/published_research/.
Remember
that all qualified expenses, including prescription drugs,
can be paid for tax-free, from your HSA. If you've
still got a traditional health insurance policy and would
like to investigate a health savings account, please give
us a call at 866-749- 2039 and we'll be happy to help
you.
To your
health and wealth,
Wiley
Long
President - HSA
for America
P.S. Next month, I'll be covering contribution deadlines
and limits, reviewing tax savings implications, and talking
about what to do if you happen to over-contribute.
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