Who Is This Book For?
Everybody Who Uses Prescription DrugsWhy This Book?
There are two kinds of people in this country: those who take prescription drugs and those who will.
The purpose of this book is simple: to show you how you can dramatically cut your cost of prescription drugs. Following the strategies in this book, you can usually save 50-90% on your prescription costs. Are you thinking that this is impossible--or that it's some sort of gimmick? It's not either. The fact is that most people don't know the simple techniques that can easily deliver huge savings on their prescription drugs.
Here's just one example. Lipitor, which is used to treat high cholesterol, is the largest-selling drug in the world--$11 billion in sales each year. One of the most frequent dosages is a single 10 mg tablet taken once a day to reduce LDL cholesterol (the bad cholesterol) by 25-30%. At retail, a thirty-day supply costs about $65. Most people get started on Lipitor when their doctors give them a handful of free samples and a refillable prescription for twelve thirty-day supplies. Most of these patients go to their local drugstores to get them filled. If they are among the forty-five-million-plus Americans who don't have prescription drug insurance, they have to pay the full $65 every thirty days. Very few of these consumers realize that they have many lower cost options that work just as well. For example:A Generic Drug
. Approximately two-thirds of the consumers taking 10 mg Lipitor can just as safely and effectively lower their LDL cholesterol by taking a similar drug called lovastatin that costs about $43 at retail.1 Savings:$22/month over Lipitor (34% savings)Lower Cost Drugstore
. By shopping around by phone or on the Internet with several different pharmacies, this same generic lovastatin can be purchased for as little as $23 (Costco mail order, no membership required). Also, your local pharmacy may be willing to match such prices in order to keep you as a customer. Savings: $43/month over Lipitor (66% savings)Tablet Splitting
. Some patients may find that lovastatin doesn't work as well as Lipitor. For them, their doctors can write prescriptions for a half tablet daily of 20 mg Lipitor, and receive exactly the same medication in the same dose for about $47. Savings: $28/month over the 10 mg Lipitor (43% savings)
Over a period of years, these savings add up to thousands of dollars for just this one drug. And there are hundreds of other drugs for which similar savings are not only possible, but easy for the consumer who knows what to do. With this book, you can and will save hundreds or thousands of dollars in prescription costs. I'm going to give you detailed, essential, and easily implemented information that will enable you to do this. I've been a healthcare insider, entrepreneur, and consumer advocate for thirty-five years. One of my companies, Peak Health Care, introduced health benefit innovations during the 1970s and 1980s that have since become industry standards in their markets, such as insurance coverage for physician office visits, full hospital coverage with no patient cost, and low-cost prescription drug benefits. Both members and their employers saved hundreds of millions of dollars on their healthcare as a result. More recently, my newest company, Hyde Rx Services Corporation, has brought the cost savings techniques of this book to employers and their employees. The result has been that thousands of members along with their employers are saving huge amounts of money for high quality prescription drug benefits. In Prescription Drugs at Half Price--or Less
, I tell you the techniques that the drug industry doesn't want you to know about, why drugs cost so much, and how you can beat them at their own game.Who Is This Book For?
This book is for anyone--insured or not--who wants to pay less money for his or her drugs. It may be you, or your parent, or a good friend who is tired of paying full retail prices for increasingly expensive prescription medications.
. You may be one of the 43 million people in the United States who have no health insurance coverage, or one of the millions more, like me, whose insurance doesn't cover prescription drugs. You may be one of the 3.4 million U.S. workers who have lost their employer-provided coverage during the past three years;2 or one of those who will soon lose such coverage. You may be a retiree whose former employer has cut back on prescription drug benefits or eliminated them altogether. This book can save you thousands of dollars.
2. Medicare Part D Drug Beneficiaries
. You may be on Medicare, which has just initiated Part D drug coverage beginning in 2006, but which covers only about half of the drug costs for the average beneficiary. You are still left with large out-of-pocket deductibles, copayments, and holes in coverage. Every chapter in this book can help you save a lot of money on what Medicare doesn't cover. Also, Chapter 13 explains Medicare Part D and how to find the right plan for you from among the many plans offered.
3. High-Deductible Insurance
. You may have high-deductible health insurance that doesn't kick in until after you've spent hundreds or even thousands of dollars each year. Until the deductible is reached, it's the same as having no insurance at all. I can help you save 50-90% on your drugs.
4. Insurance with High Copayments
. Even if you are one of the lucky ones who has first-rate coverage through your employer, you are undoubtedly finding your copayments are costing you more and more every year. In many cases, your copayments can actually exceed the total price of the drugs you'll find by using the techniques detailed in this book. That's right, even insured consumers can save a lot of money with this book.
5. Health Savings Account
. Finally, you may be one of the more than one million Americans participating in employer-sponsored Health Savings Account (HSA) plans.3 With an HSA, you receive a high-deductible insurance policy combined with an employer/employee-funded savings account which you can use to help pay for the deductible and other out-of-pocket costs. The idea behind HSAs is that, when you're spending money out of your own savings account, you'll feel like you're spending your own money (which you are), and that you will be a more savvy, price-conscious consumer of healthcare services. It's actually an excellent idea, but it practically forces you to become a much more informed, discerning prescription drug buyer. If you have an HSA, the techniques in this book will help make your savings account grow from year to year, rather than shrinking under the burden of ever-higher drug costs.
Regardless of your health insurance status (or lack thereof), you are almost certainly paying more than you need to for your prescription medications. Worse, the high cost of drugs may be preventing you from buying them at all. This book will help you get the drugs you need at the lowest possible cost.Why Do Drugs Cost So Much?
Why are prescription drugs so expensive and becoming more so? The U.S. consumer price inflation rate has been running at less than 2.5% for the past ten years, and yet drug costs have been rising by double-digit rates for just as long. And many new drugs are being priced at hundreds or even thousands of dollars per treatment
. The problem is that drugs are not priced or sold under the same free-market rules that govern almost everything else you buy, from DVD players to cars to food to clothes to, well, almost everything.
Instead of manufacturers and retailers setting competitive prices to attract the business of price-sensitive customers, we have a system where drug companies can set arbitrarily high prices that are paid by insurance companies who have little power over the doctors who actually decide which drugs are prescribed for patients who don't care about cost because most have insurance. As far as the drug companies are concerned, you aren't even the customer. Your doctor is. Don't believe me? Just ask any drug representative who works for a brand name drug manufacturer. And since doctors don't pay for drugs, they have little reason to either know or care how much they cost. I can't imagine a more lucrative business model for any company than to have customers who could care less about the cost of the products they're ordering.
This system is clearly not working for you, because you are
a price-sensitive customer. You want and deserve to get the best medication at the lowest price.
This book will tell you how.
Know the System to
Beat the SystemThe Current Drug Pricing System Is Irrational
A lot of people, myself included, love Hershey's chocolate bars. They cost about sixty cents each, and people buy them by the boatload. Many can't imagine ever eating any other chocolate bar. So here's my advice to the Hershey company on how they can increase their revenues by almost a hundred times
--overnight. All they have to do is increase the price of each Hershey bar to $55. That would make them one of the most profitable companies in the history of the planet.
What's that you say? Where ever did I come up with such a cockamamie idea? I got it from an article in the Wall Street Journal
reporting that the Italian drug company Sigma-Tau had just increased the price of its cancer drug Matulane from 60¢ to $55 per pill.1 So if a drug company can do it, why can't Hershey? It's obvious, of course, why Hershey can't do it. Nobody would pay $55 for a candy bar, especially when store shelves are laden with competitive products for 1% of the price. So how can Sigma-Tau think it will get away with such an obviously irrational move? The answer goes a long way toward explaining why healthcare costs in general, and prescription drug costs specifically, are so high and getting higher at a record rate.
The current system of high-cost drugs is based on a single, aberrant economic principle. Most consumers neither know nor care about the actual prices of their drugs. That's because their insurance companies have long paid most of their prescription bills, leaving the consuming patients to pay only nominal copayments. Copayments were usually set at fixed dollar amounts, so patients had no need to know or care whether their drugs actually cost $20 or $200. Likewise, doctors, who write the prescriptions, but don't pay for them, have no need to worry about drug prices.
Stuck with most of the bills, including those for Sigma-Tau's Matulane, are the anonymous insurance companies, along with the employers and HMOs that have been able to do little to keep doctors from prescribing expensive drugs at prices that rise far faster than inflation. In the drug manufacturing business, happiness is selling all you can make and never mentioning price.
Patients see drug ads on TV and then go ask their doctors for them. Most doctors not only write the prescription, but give out handfuls of free samples provided by the 90,000 drug representatives who line up to generously stock doctors' sample shelves.2 These "free" drugs are, quite simply, among the most expensive drugs on the market. Free samples are like a free lunch. There's no such thing.
But, you say, surely the insurance companies and HMOs should be able to use their massive buying power to make the drug manufacturers set their prices at a more moderate level. Unfortunately, too many insurance companies have been only too happy with the current system.
All they have to do is pass on these costs to their clients--with their own markups--in the form of ever-higher insurance premiums. Even worse, many insurance companies actually receive rebates paid by the drug manufacturers to reward them for promoting more expensive drugs than their members really need. As long as they all do it, there is no incentive to really control costs.
Employers have never been happy with the rising cost of prescription drugs, but they have always had a secret weapon that allowed them to compensate. They just pay their employees less than they otherwise could have to make up the difference. Employees rarely notice--since it is happening to everyone everywhere, this actually appears normal.
But the story gets worse.
The past two decades have seen the rise of a new kind of prescription drug middleman called the pharmacy benefit manager or PBM. PBMs promise lower drug costs to their employer and insurance company clients. They do this by pooling the combined purchasing power of millions of patients to force the drug retailers and manufacturers to sell drugs to the PBMs at lower prices. The PBMs then pass these lower prices on to their clients--at least in theory.
As it turns out, the drug manufacturers were only too happy to play along with this new PBM development. They could easily accommodate a 15% discount to the PBMs by simply raising drug prices by 20%. The drug companies became even happier when they discovered they could get the
PBMs to actually promote their most expensive drugs by paying them rebates instead of providing discounts. Since PBMs didn't have to pass these cash kickbacks through to their clients, this made the PBMs very happy, and most of their clients didn't know enough to ask for their share. And even when some clients learned to ask, they found that the PBMs were unwilling to give them details of their deals with the drugmakers.
PBMs also learned that they can make a lot of money by selling drugs from their own mail order pharmacies and by keeping part of the retail pharmacy discounts they were so successful in negotiating. In fact, PBMs actually lose a lot of money on the fees they charge their clients for claims processing and other administrative services. But despite such loss leader services, the rebates, retail markups, and mail order profits have made the PBM business very profitable indeed.
None of this adds up to an incentive for PBMs to provide their clients and members with the drugs they need at the lowest possible cost. In fact, it is quite the opposite. Instead of becoming the price-busting intermediaries between the client and the vendors, the PBMs have become drug distributors themselves, adding yet another expensive link to the drug distribution chain. Whatever you can say about PBMs, they have not been fiduciaries that try to provide their clients with the drug benefits they need at the lowest possible price.
What about the pharmacies themselves? The PBMs have forced them to provide discounts from their normal prices, and there is little the pharmacies can do about it. Pharmacies have little or no control over what doctors prescribe and patients purchase. For the most part, they are just passive links in the drug distribution chain. But even the smaller profit percentage allowed the pharmacies by PBM-negotiated pricing adds up to a lot of money on the pharmacies' bottom lines, especially when drug prices are going up by 15-19% per year. And the drugstore can always put the pharmacy in the back of the store, so that consumers will also buy flowers, toothbrushes, and motor oil on their way to pick up their prescriptions.From the Trade Paperback edition.
Excerpted from Prescription Drugs for Half Price or Less by Stephen Hyde. Copyright © 2005 by Stephen S. S. Hyde. Excerpted by permission of Bantam, a division of Random House LLC. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.