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What if you went to your regular pharmacy expecting a co-pay of $10 for a 90-day supply of generic medication and you were told that this time it would be $100? It happened to one of Dr. David Belk’s patients. The drug in question was the generic for Prozac, and the patient decided to look elsewhere for a better deal. He later showed Belk, who practices in Alameda, Calif. and runs Truecostofhealthcare.org, the receipt for $22.50 for a year’s supply of the medication from Costco.

Welcome to the wacky, mystery-cloaked world of prescription pricing. It’s hard to pick a single winner: Drugstores, pharmaceutical companies and insurers have all benefited, Belk said. But it’s easy to pick the losers: healthcare consumers.

Healthcare is expensive, and it can be maddening to discover you’ve been paying several dollars per tablet for a medicine when a similar one that cost pennies would have worked. While it’s important to look after your physical health, it’s also important to understand you don’t always get what you pay for. There are times when cheaper is just as good, and if you can choose, you might want to try an alternative.

Substituting? We Do It All the Time

Belk compared it to going to the grocery store, planning to buy some hamburger for dinner — only to discover that hamburger was now $50 a pound. How many people would decide they would rather eat chicken or pork chops? Or even sirloin? Except that if it’s a prescription, you can’t decide to try something else. It’s that $50-a-pound hamburger or nothing, unless you take the time to call the doctor’s office to see if a cheaper drug in the same class might work as well. (But be warned, Belk said: Most doctors have no idea what medications cost. Nor can pharmacists tell you which drug in the same class is cheaper — there’s no simple way to check.)

Drugs in the same class are routinely substituted for one another, Belk said, noting that hospitals do not stock all of the choices within a class of drugs in their pharmacies — too much would be wasted. If a patient needs an ACE inhibitor, for example, the doctor typically chooses among the ones available at the hospital pharmacy. It’s not so different from checking the formulary from your insurance to see which drugs would be covered and choosing among those.

Belk said switching to another drug in the same class is not about getting an inferior product. When one company comes up with a revolutionary treatment, he said, others rush to see if they can produce something similar. And what is patented is the molecule, Belk explained, so if another company can come up with a slightly different molecular structure that has the desired clinical effect, it can also patent that (a longer-acting medication, for example). Happily for consumers, many life-extending drugs from the 1970s and ’80s are now generic. Great news, right? Only some of us are having experiences akin to seeing $50-a-pound hamburger.

Luckily, the price movement isn’t all up. Belk wrote about it in a blog post:

I did a survey of what pharmacies in the US have paid for 1,240 listings (including different doses and preparations) of over 400 generic prescription medications each quarter from October 4, 2012 through January 7, 2015). I tracked how the price of each listing changed each quarter and in total.

Among my findings:

  • Nearly half of the generic listings (604 in total) actually went down in price during this time. Among these, 349 listings went down 10% or more, 38 went down 50% or more and 14 of them decreased by at least 90% in price.

That’s the good news. On the other hand —

Nearly half of the generic listings surveyed (607 in total) went up in price — many way up. Among these, 314 of the listings went up at least 50% in price, 240 of the listings (20%) at least doubled in price, 87 went up at least five times in price and 42 of them went up ten or more times in price since October, 2012.

That means that although about half the prices dropped, the declines were more modest than the gains. While 38 prices decreased by at least half, 240 increased by at least half — and three times as many went up tenfold as decreased that much. And there seems to be little or no discernible reason for huge price differences (sometimes) in capsules or tablets. Or lower doses that cost more than higher ones.

Healthcare costs can topple budgets that are otherwise workable, and it is often difficult for healthcare consumers to know the price of the treatments they will receive ahead of time. And medical bills that you can’t afford to pay can potentially affect the health of your credit, leading to additional stress as you try to regain or maintain good health. (If you’re worried about how your medical debt could be affecting your credit, you can see your free credit report summary on Credit.com.)

So when there is an opportunity to know some of the costs of various alternatives, it may be wise to take it.

Where Consumers Have Some Control

What can you do to control costs of prescriptions? First, educate yourself, particularly if you have a chronic condition that requires medication. Your insurance likely has a formulary similar to this one from Wal-Mart. It is also possible to find out from Costco what a given prescription will cost, and Costco bases its prescription prices on cost. (Belk said he’s not out to promote Costco, but its prices correlate with its costs, and that is not necessarily true elsewhere.) So prices there can give you a rough estimate of what drugstores are paying for the medicine. Belk also said it is perfectly OK to take a printout to the doctor to ask if there’s anything on the approved list that would work. (He also said some doctors resist, often because they’re used to prescribing a certain medication and are uncomfortable with change, or because they have a financial interest in a drug company.)

Second, don’t assume you’ll get the lowest price by using your insurance coverage. Check to see if your medication (or its generic equivalent) is available via your insurance’s mail-order pharmacy at a price lower than Costco’s.

Finally, you can’t assume that the lowest price for a refill is the same place you got the prescription last time. When your 90-day supply runs out, you’ll likely need to do all this again. If you’re paying $10 for a 90-day prescription at Wal-Mart, it may not be worth it to shop around. But discovering that the co-pay that was $20 last quarter is now $100 isn’t something you want to do at the pharmacy window.

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  • John Norton

    One way consumers may be able to save money (“Are Your
    Paying too Much for Generic Drugs?,” Jan. 26) is to talk with their local
    community pharmacist. Surveys and media reports have shown they are often very
    price competitive for cash customers. Pharmacists also may be able to suggest
    to the prescriber a less expensive therapeutic alternative such as a different
    type of anti-inflammatory or acid reflux medication. I totally agree with your
    characterization of prescription drug pricing as a “wacky, mystery-cloaked
    world,” but the posting fails to mention the pivotal and largely unrecognized
    role that pharmacy benefit managers (PBMs) play. PBMs are middlemen hired by
    insurance companies to process and adjudicate prescription drug claims. They
    decide how much the pharmacy will be paid for buying and dispensing the drug.
    There is no guarantee that the pharmacy’s acquisition cost will be covered by
    the PBM’s reimbursement. The PBMs get the money for reimbursement from the
    health plan’s sponsor – your employer. While the PBM may pay the pharmacy $8
    for a drug that cost $10 to acquire, the PBM very well may charge the health
    plan $15. The PBM pockets the $7 difference. This pricing spread is why PBMs
    have grown from modest claims processors to multi-billion dollar Wall Street
    darlings. Illuminating looks at the murky world of PBMs are contained in Fortune magazine’s
    “Painful Prescription” by Katherine Eban, Oct.10, 2013 and “Do Drug Benefit
    Managers Reduce Health Costs?” by Jayne O’Donnell, USA Today, March 3,
    2014.

  • David Freiman

    Until I was covered by Part D, there was no way to tell how much the drug store was paid
    for my medicines. Now I get a statement with the PBM payment and
    my co-pay listed. The sum of the payments
    by the Medicare intermediary and my co-pay are typically 25-75% higher
    than the self-pay price from a major Warehouse store. In the case of one my lowest priced generics my
    co-pay is actually more than the total price I can pay at the
    “Warehouse” store.

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