No. 7 of the Top 10 Stories of 2004: More people are living longer, and that means more people rely on prescription drugs to help maintain their quality of life. As demand keeps rising, so do prices. What is the solution?
By Todd Zwillich
Reviewed By Brunilda Nazario
If prescription drug affordability were measured in headlines, 2004 would have been a windfall year for American seniors. Congress fought over drug reimportation legislation. Consumer groups hammered away at drugmakers for high prices. President George W. Bush and Sen. John Kerry battled over whether Medicare should have the right to negotiate lower prices on behalf of seniors.
Of course, prescription drug prices are measured in dollars, not headlines. And for all the wrangling and debates coming out of Washington, the bottom line is that most seniors paid substantially more for drugs this year than they did in 2003.
The typical American senior taking three prescription drugs paid $175.56 more for medications over the 12 months ending in September 2004 than over the previous year, according to the most recent figures available from AARP. Of the 197 most-used drugs by elderly patients, 161 went up in price during that time, making the chances very good that you're paying more for your treatments than you did in 2003.
Price hikes were not limited to seniors without private prescription drug coverage. More than half of 333 large companies raised premiums and co-payments for retirees with company-sponsored prescription drug plans in 2004, according to a Kaiser Family Foundation survey released in December.
It is true that Washington did make some progress in 2004. Medicare launched its prescription drug discount card program, which is offering 15% to 30% savings off of retail prices on some drugs. Low-income seniors can save a lot more if they take advantage of the program's $600-per-year credit. The agency also started offering average price comparisons for popular drugs in an effort help consumers shop smarter and hopefully spur drugmakers to lower prices.
But even the Medicare prescription drug discount card program was branded a disappointment by many observers. Just 5.8 million of Medicare's 40 million eligible beneficiaries -- one in seven -- have signed up for the cards. Analysts say that figure reflects seniors' confusion in navigating the program's dozens of options.
Millions of Americans have looked to Canada and Europe in an effort to find lower prices. While the practice still remains technically illegal, regulators have largely turned a blind eye to consumers who import a 90-day supply or less by crossing the border or ordering medications over the Internet.
Congress has fought for years over measures that could make it legal for Americans to buy lower-cost, popular prescription drugs from other industrialized nations, and 2004 was no different. A federal task force lead by the surgeon general recently completed a report on the safety and feasibility of allowing importation, though it has not yet released its findings.
Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America, says that U.S. drugmakers continue to consider importation "a risky game" and that his group expects the task force to brand it unsafe. "We hear that it may well go that route," he says.
Next year, Medicare will start sharing drug costs with beneficiaries. Benefits vary according to your income and how much you spend, but the plan should cut overall drug spending by about half for the average senior. Low-income seniors qualify for additional subsidies and will wind up paying far less.
The problem is that the new Medicare benefit, known to policy makers as "Part D," doesn't kick in until Jan. 1, 2006. That leaves seniors with one more year to figure out how to minimize the impact of prescription drug prices that are nearly guaranteed to keep rising.
Close media attention on rising drug costs spurred a few organizations to come up with ways to help consumers choose lower-cost drugs. Most popular medications today belong to classes of similarly-acting drugs that often vary in price, making price savings possible for patients and their doctors who are willing to switch.
One organization is Consumers Union, the group behind Consumer Reports magazine. The organization earlier this month published guides to finding 'best buy' drugs for three popular medication classes: cholesterol-lowering statins, heartburn medications, and nonsteroidal anti-inflammatory drugs for pain. Consumers in some cases can save over $100 per month by switching from a brand-name drug to a similar generic drug, according to the reports.
The group plans on releasing reports on other drug classes at a rate of about one per month on its web site, says health policy director Gail Shearer. A report on antidepressant drugs is due out in January, followed by one looking at blood pressure medications.
"This is a market that is extremely difficult to navigate right now," Shearer says. Still, retail prices for the same drug often vary widely from pharmacy to pharmacy, and it often pays to call several outlets before filling a prescription, she says.
Medicare also launched a database on its web site that lets consumers compare average prices for different drugs and suggests lower-cost generic alternatives for many drugs. Seniors with a list of drugs they take can also get comparison information by calling the agency at (800) MEDICARE.
Interest in Medicare prescription discount cards may have been somewhat low so far, but officials stress that there are still savings available for seniors able to figure out the program. The agency is strongly urging low-income seniors who qualify to register because of a $1,200 total subsidy that's good toward prescription purchases before 2006.
Low-income seniors who sign up by Dec. 31 are eligible for the full 2004 subsidy of $600, which can be carried over and added to another $600 available in 2005. "As soon as they read my words they have to pick up the phone," says Gary Karr, a Medicare spokesman.
Most drugmakers also offer discount programs for their products, though the savings are restricted mostly to low-income consumers. In some cases the programs work in tandem with Medicare discount cards, though in other cases they can be used alone. The industry runs a web site at www.helpingpatients.org with information on hundreds of private and public discount programs.
Beyond the Borders
Legal technicalities aside, many consumers continue to turn to Canada for lower prescription drug prices. Seniors who live in or near border states still take bus trips north to shop at foreign pharmacies. For the rest of the country, dozens, perhaps hundreds, of Canadian pharmacies advertise on the Internet often with little or no evidence that they sell approved, bona fide medications.
But governments in many states, including Minnesota, Maine, and others, have begun striking deals with Canadian Internet pharmacies in an effort to secure lower-cost drugs for state employees and others.
New York was the first state to offer online price comparisons run by the attorney general's office, though many others have followed, Shearer says.
Meanwhile, the prescription drug marketplace is likely to soon get even more complex for seniors. Medicare is due within the next two months to unveil its rules governing the 2006 prescription drug benefit. Soon after that, seniors will begin choosing a private insurer from several different competing plans to get their benefits.
Published Dec. 21, 2004.
SOURCES: Trends in Manufacturer Prices of Brand Name Prescription Drugs Used by Older Americans -- Second and Third Quarter 2004 Update, AARP Public Policy Institute, November 2004. Jeff Trewhitt, spokesman, Pharmaceutical Research and Manufacturers of America. Gail Shearer, health policy director, Consumers Union. Gary Karr, spokesman, Centers for Medicare and Medicaid Services.
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