Why does my medicine cost so much – and what can I do about it?

  Patent law.

When a new drug is approved by the FDA, the patent on the drug lasts for 20 years. This means the drug company that owns the patent can raise the price as much as it likes without competition. As the demand for a drug increases, the price will often increase. Drug companies can extend a patent by slightly changing the formula of an existing drug, for example, manufacturing a sustained release formula, or combining two drugs into one pill.

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  Limits on Medicare.

By law, Medicare is not permitted to negotiate drug prices. In contrast, the Veterans Health Administration (VHA) can negotiate prices for brand name drugs and as a result, the VHA pays up to 80% less than Medicare. Additionally, Medicare and Medicaid are required to cover all drugs approved by the FDA.

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  Lack of information on drug choices and effectiveness.

Patients do not choose the drugs they are prescribed or have access to research studies on whether a new drug is actually better than an existing medication. Instead, doctors usually prescribe the drug they are most familiar with for patients. The information a doctor receives about a drug comes from pharmaceutical companies that spend millions each year marketing to health providers. A doctor may not consider an alternative, less expensive drug or one that might be more effective.

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  Pharmacy Benefit Managers acting as middlemen.

Patients who are only responsible for a co-pay do not know the real price of a medication. Pharmacy Benefit Managers (PBMs) negotiate directly with pharmaceutical companies to lower prescription drug prices, drive competition for more generic drugs, and secure savings for customers through rebates and discounts. CVS and ExpressScripts are examples of PBMS. Because PBMs are paid based on the number of rebates they negotiate, critics warn that it is possible for them to retaliate against manufacturers who cut prices by dropping them or placing them on a higher tier. Others contend that PBMs keep some of the rebates instead of passing them to consumers through lower out-of-pocket costs.

While a low percentage of its healthcare costs is spent on drugs, the U.S. has some of the highest drug prices in the world.

In the United States, Advair Diskus, a drug for people with asthma and COPD, carries a price tag of $386.97 (with a coupon at Rite Aid!), while in Canada, the price is $131.87. Humira, a drug to treat rheumatoid arthritis, costs $2,246 in the United States and $1102 in England. Cymbalta, a drug for depression, costs patients $194 in the U.S., but only $46 in England. Why are prices for prescription drugs in the U.S. so much higher than in Europe and Canada?

In other countries, the healthcare system is much simpler.

There are not as many organizations trying to buy drugs, and groups can exert more pressure on pharmaceutical companies to lower costs. The United Kingdom’s Health Service purchases the country’s entire supply of drugs while in the U.S. drug purchasing falls to hospitals, insurance companies and various drug plans buying on behalf of individual clients, resulting in unregulated pricing. Because buyers are limited in other countries, drug companies are forced to negotiate if they want to compete in a market. Canada has a drug review board that evaluates the clinical, economic, and patient evidence on drugs, and provides reimbursement recommendations and advice to Canada’s federal, provincial, and territorial public drug plans. This helps healthcare providers determine what price they are willing to pay for a drug. Also, drug companies are willing to sell their pharmaceuticals for less in Canada because they can sell the same drugs at a higher price in the U.S.

The public outcry against high drug prices found a voice in the last election cycle and Congress is still debating remedies.

Among proposals discussed is allowing Medicare to negotiate drug prices, allowing for import of less expensive drugs from other countries, creating transparency in drug pricing, and providing for simpler drug comparisons. Other proposed bills would remove some barriers to cheaper generic drugs. Some states such as Vermont, New York, California and Utah are proposing their own laws to address the problem.

In the meantime, there are several actions an individual can take to lower their own prescription drug costs:

•   Buy generic drugs.
•   Know your insurance coverage. Each plan has a list of drugs it covers, divided into tiers. The higher the tier, the higher the copay. If a medication you use falls into a high tier, ask your doctor if you can substitute a drug in a lower tier.
•    Order by mail. The price of a 90-day supply of a medication can be as much as one-third lower.
•   Use a preferred pharmacy.
•   Use drug discount cards. Drug discount cards can lower prescription costs, but cannot be used with health insurance, including Medicare.
•   Seek financial assistance. Drug companies usually offer assistance to qualified individuals through programs such as NeedyMeds.org, Partnership for Prescription Assistance, and Patient Advocates.org.
•   Split pills when safe. Instead of taking a 10 mg pill, you may be able to split a 20 mg pill in half, but always talk to your doctor or pharmacist first. Some medications cannot be divided and still be effective.

Finally, if you are concerned about the high cost of prescription drugs, contact your Congressman and Senators.

They need to hear from you about this important issue and how it impacts you.