Health care costs have skyrocketed over the past decade. There are many reasons why, but the rising cost of prescription medicines is without a doubt a contributing factor.
No one is immune from these rising costs. Whether or not you have health care insurance which includes coverage for prescription medications, you are affected. Government, insurance companies, and private business are also affected, too. Nationally, about 60% of Americans get health care coverage through employers; about 27% get coverage through government, including Medicare, Medicaid, and the military; and about 15% or about 47 million Americans have no health care coverage at all.
Regardless of which group you belong to as a consumer, here is some information to help you be a better, smarter consumer.
If you have health insurance, find out if you have pharmaceutical coverage.
If you have pharmaceutical coverage, understand what it covers. Read your insurance booklet; go to your plan’s website; talk to a representative in-person or by telephone. Do what you need to understand your drug benefit. Don’t be passive. If you understand your coverage, you will be better able to use it wisely.
Using your benefit wisely is helped by understanding your plan’s “drug formulary”. The following explanation is designed to help you do that. It is a general explanation, and may not fit your plan’s coverage exactly. But it should help:
- A drug formulary is a list of drugs which your plan will cover, or pay for, to some extent. The key phrase is “to some extent”. Not all drugs on a plan’s formulary are necessarily covered equally. The extent to which different drugs in the same class may be covered under your plan can vary widely.
- Moreover, if a drug is not on the formulary whatsoever, that is if it is “off-formulary”, then it is usually not covered at all.
- Generally, drugs on a plan’s formulary are placed into one of three, or maybe four, category levels by the plan for reimbursement purposes. The “most preferred” formulary level, or tier, usually provides the highest insurance coverage and requires the smallest co-pay. For example, a drug in this most preferred tier might require only a small co-pay or perhaps no co-pay at all. Generics are usually in this tier, but sometimes plans also include a few patented, brand name drugs, too. By making this level or tier the least costly in terms of co-pays for consumers, health insurance plans hope through market incentives to drive consumers to those drugs instead of more costly alternatives.
- The next level down for reimbursement purposes is usually a limited number of brand name, patented drugs. Not all brand name, patented drugs in a therapy class will be included at this level. For example, if there are 6 brand name drugs available to treat a condition, one or two or three of the brands might be selected. Although the consumer’s co-pay for this tier of drugs will be higher than the most preferred level, it is better than the next level down. The reasons surrounding formulary development and tier rankings are complicated, but suffice it to say that when one of several equally beneficial drugs (on average for the population as a whole) is as medically effective as another, then the price of one drug relative to another in that class becomes very important, competition for customers increases and price negotiations involving drug companies and health care plans occur, pricing deals are cut, and some brand name drugs get selected over others because they are then equally good but less expensive and more cost-effective.
- The lowest tier is usually made up of the brand name, patented drugs which were not selected to be preferred. Even so, many plans still provide some coverage for drugs in this tier, so they are still considered to be on-formulary, albeit in a non-preferred position. But now the health insurance coverage is less and the consumer’s co-pay is even higher.
In addition to understanding your formulary and its tiers, check to see if there is a mail order pharmacy option available through your plan. Often, mail order pharmacies are less expensive for the plan, and the plan may pass along some of the saving to consumers in the form of lower co-pays to induce use. Some people are comfortable with using mail order pharmacies, especially for chronic use medicines.
In summary, there are three lessons here:
You need to understand how your particular pharmaceutical benefit works. Are there tiers and, if so, what are the tiers? What is your co-pay in each tier? Are generics in the best tier? Will a generic work for you? If a generic is not appropriate, is a preferred branded drug in the next tier, with the next lowest co-pay, appropriate?
For you to make best use of your drug benefit, your doctor needs some information. Your doctor needs to know what drugs are on your formulary, and what drugs are in what tier. This means that you need to know if your doctor has a copy of your plan’s formulary, and if not then you need to bring one with you.
Find out about your plan’s mail order options. Will it work for you and are you comfortable with it? Will mail order lower your co-pay, especially on your chronic medications?
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Not everyone has health insurance, and not everyone with health insurance has pharmaceutical coverage.
If you don’t have a pharmaceutical coverage, you will probably pay the full price for the drug yourself. This is called paying the cash price or the usual and customary price. But even if you pay for the entire cost yourself, there are things you can do to be a better consumer and save money:
Shop around and compare prices. Prices can vary widely among pharmacies locally. And if you are comfortable using licensed mail order pharmacies, consider that option.
Go generic. Ask your doctor if there are generic equivalents available. Many brand name drugs have equally safe and effective generic equivalents that can cost a fraction of what the brand name drug costs, and they are the chemically identical.
If you need a brand name drug and can’t afford it, check with the drug manufacturer, your pharmacist, or your doctor. Many pharmaceutical companies have patient assistance programs to subsidize or freely provide medications to low-income, qualified patients.
Check with organizations you belong to and see if they have arrangements for members to obtain drug discount cards.
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If you are Medicare eligible, consider Medicare Part D. Be sure you understand how it operates in conjunction with any other pharmaceutical coverage you might have.
If you are taking more than one medication, make sure your doctors and your pharmacists know everything you are taking. Medicines can interact with each other and rob you of your medication’s benefits or even hurt you.
To learn how to get the most out of your prescriptions and your prescription dollar, call AARP at 1-800-646-2283 and ask for the Drug Smart consumer information packet. In it, you will find helpful information and tips on how you can save money through the smart and safe use of prescription drugs. To learn more, you may visit AARP’s Web Site or link directly to the Drug Smart publication.
The Office of the Insurance Commissioner has a toll-free number to help you with questions about health insurance. For more information, call 1-800-397-4422. They also have a variety of consumer publications that you can download including a flyer on Paying for Prescription Drugs.
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