As prices rise, consumers search for the lowest possible prescription cost
Whereas governments in many countries regulate drug pricing and purchasing, in the United States it is generally a market transaction with many buyers and few sellers, both of which inflate prices.
Drugs are a very significant component of health care costs, said Renee Rivard, director of Total Compensation and Wellness at Michigan State University (MSU), which provides health care benefits for 30,000 retirees, employees and family members.
Large employers and those working with large coalitions have leverage with drug companies when negotiating prices. “Anytime you have many people, the pharmacy benefit manager can take that volume and negotiate with pharma [shorthand for the drug industry] to lower the cost because it brings more business to them,” Rivard said.
“We have a specific consultant well-versed in the language of pharma. They understand where the fees are hidden in contracts. They let us uncover every stone and rock to make sure we have the best prices. Are we getting 100 percent of the rebate money? If you buy many drugs in volume there are many rebates that come along with that.”
MSU’s approach to prescription drug pricing is similar to other health plans that negotiate with drug companies using their volume as leverage. But these individually negotiated agreements mean base prices vary widely.
“Some of the fluctuation in drug prices has to do with the general volatility in the drug market. You saw huge cost savings with generic medications. Now we see a situation where certain manufacturers no longer produce those drugs and it causes generic prices to escalate,” said Eric Roath, director of professional practice for the Michigan Pharmacists Association.
For those without health insurance the costs and choices are particularly daunting.
The Michigan Department of Health and Human Services (MDHHS) has developed a website called MichiganDrugPrices.com to help consumers “save money by providing information and access to resources to find lower priced medications.”
The site features a database comparing drug prices, details about retail discount drug programs and assistance programs available to help people lower drug costs.
The drug price comparison database is basic; a user provides a zip code, a prescription drug name and the strength. Depending on the drug and zip code location, the search may return dozens of pharmacies along with the prices they have submitted to MDHHS.
A search using a downtown Lansing zip code illustrates the wide variation in pricing for common prescription drugs. A query for omeprazole magnesium, the generic version of Prilosec OTC 20mg., found prices for 28 pills as varied as $18.69 at the Rite Aid Pharmacy at 3700 W. Saginaw – the lowest, $26.40 at the Ingham Regional Pharmacy and $59.11 at Pharmacy Plus at 915 E. Michigan Ave. – the highest.
“The pricing on this website reflects the “usual and customary” prices reported by participating pharmacies for generic Medicaid prescriptions filled during this survey period,” MDHHS explained.
The website features pricing for the 150 most commonly prescribed drugs in Michigan and it cautions that because prescription drug prices are changing constantly, it is important to double check the information with a pharmacy.
Also addressing high prescription prices are the discount programs offered by drug companies and retailers like Meijer.
“Our free prescription program includes leading oral generic antibiotics with a special focus on prescriptions most often filled for children, prenatal vitamins and medications for those with diabetes (metformin) and high cholesterol,” Meijer’s Public Relations Manager, Joe Hirschmugl, said in an email. “Since its inception in 2006, the program has filled nearly 29 million free prescriptions, saving Meijer customers more than $410 million.”
The area’s retail pharmacies have similar programs. Rite Aid has its “Rx Savings Program” which, among other benefits, offers a 30-day supply of select generics for $9.99 and a 90-day supply for $15.99. Walgreens has a Prescription Savings Club that requires a fee ($20 for individuals/$35 for a family) and promises savings on a 90-day supply of value-priced generic drugs at savings ranging from $50 to $118.
All of these compete with mail order suppliers, notably HealthWarehouse.com, whose prices can be significantly lower than retail outlets.
In January, Consumer Reports released a five-drug pricing survey of wholesale outlets like Costco and Sam’s Club, big-box stores like Walmart and Kmart, grocery stores and pharmacies.
Consumer Reports put it this way: “Prices can vary widely from store to store, even in the same town. The trick is to shop around.”