The Arthritis Newsletter

Summer 2013

Managing Your Prescription Drug Costs

By Guest Contributor Martina Franchi Health & Benefits Consultant and Principal, Mercer


Consumer Advisory Board members have been asked about pharmacy costs and biologic agents. Martina Franchi, a Health and Benefits Consultant and Principal at Mercer has provided some information regarding this issue.


Did you know that prescription drug costs can vary significantly from one pharmacy to another?


Some of you may be aware that different pharmacies charge a wide spectrum of dispensing fees. The fees can range from just under $5 each time you fill a prescription, to more than $12 per prescription for professional services.  This can make a significant difference to your out-of-pocket costs (i.e., the amount that you end up paying), especially if you don’t have a prescription drug plan or if you do have a plan and it requires that you pay all or a portion of the dispensing fee.


In addition to the range of dispensing fees, there can also be differences in the ingredient price and pharmacy mark-up. When combined, these variances can have a significant impact on the cost of your drug purchase.


The following is an example of the difference in costs between two pharmacies for the same prescription drug.


Highest Cost Pharmacy Lowest Cost Pharmacy
Drug Ingredient Cost $159.12 $153.00
Pharmacy Mark-up $23.87 $12.24
Dispensing Fee $11.99 $4.11
Total Prescription Cost $194.98 $169.35
Difference $25.63


The difference in the price for the same prescription is $25.63! 


This example is further magnified when we look at a more expensive drug, such as a biologic (biologic drugs are sometimes used to treat certain types of arthritis).


Highest Cost Pharmacy Lowest Cost Pharmacy
Drug Ingredient Cost $4,232.00 $3,978.22
Pharmacy Mark-up $634.80 $318.26
Dispensing Fee $11.99 $4.11
Total Prescription Cost $4,878.79 $4,300.59
Difference $578.20


In this example, the difference in the price for the same prescription is $578.20!


That’s an additional cost of almost $7,000 per year if this drug is required every month!


How to Save Money on Your Prescription Drugs…


The answer is simple… shop around!! Just like any other consumer good you should compare pricing among competing retailers. Price out your prescription drug with a few pharmacists in your local area. Pharmacists generally do not disclose their ingredient costs and mark-up, but they will advise you of the total cost which you can then compare with the total cost quoted by other pharmacies.


Be sure to check different pharmacy chains and don’t forget about big box stores.  Some pharmacies like Costco’s will fill prescriptions without a membership card.


Even if you have a comprehensive extended health plan that covers all of your drug costs so that you don’t have any out-of-pocket expenses, it still pays to shop around. Shopping around and being a responsible consumer will help sustain prescription drug plans in the future.  And it may allow your plan sponsor to direct those savings to enhancing other areas of your benefits plan.


Other helpful tips….


  • Purchase larger quantities of maintenance drugs. Maintenance drugs are those that you’ve been taking for some time and will continue to take in the future. By purchasing larger quantities you will pay the dispensing fee once as opposed to paying multiple dispensing fees if you purchased the drug on a more frequent basis. (Note: if you have a prescription drug plan, most plans allow you to purchase a maximum of 3 months’ supply at one time).
  • Ask your pharmacist if there is a generic equivalent available. A generic version of a prescription drug has the exact same medicinal ingredients as the brand name drug but can be a fraction of the cost (generally only 25% of the cost of the brand name drug). In fact, due to these significant savings, many insurance companies may begin requiring that people take the generic version of a drug if available or their contracts will only cover up to the cost of the generic equivalent.


Plan sponsors, including government programs like PharmaCare, are increasingly sensitive to the rising costs of drugs in their Health Care budgets, and, as their total drug costs continue to mount, reluctance to introduce new eligible drugs also tends to increase.  Consumers who demonstrate responsibility in keeping drug costs down (whether these be personal or billable to a plan) are better positioned to pursue coverage of new and effective drugs deemed important to their well-being.

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