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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.
| 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. 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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