By Kimberly Lankford, Kiplinger Personal Finance
As health insurers shift more of the cost burden to consumers, the average U.S. worker with employer-provided coverage now pays $9,695 per year in premiums and out-of-pocket costs for a family of four — a 118 percent increase over the past decade, according to the Milliman Medical Index. If you buy coverage on your own, you may be spending even more.
Prescription drugs are a recurring expense that can really add up throughout the year. Insurers are increasing your share of the tab for certain brand-name drugs, and you’ll pay even more if you don’t follow strict rules, such as using specific pharmacies with which insurers have negotiated discounts.
Now for some good news: You can slash your out-of-pocket spending on Rx drugs if you learn the secrets of health insurers and know how to navigate the health care marketplace.
Here are 11 easy ways to reduce your drug costs right away:
1. Know the rules for prescriptions
Many health plans are adding new hurdles that you must clear before you can get certain medications. For example, you might have to try step therapy (which requires you to try other medications first, if possible) or seek prior authorization (the insurer asks your doctor a detailed list of questions about your condition and your treatment before it will cover the drug). Understand the rules for getting your drugs covered, and get your doctor involved to help explain to the insurer why you need the medication or to file an appeal if it’s denied.
2. Get a prescription for over-the-counter drugs
You can no longer use tax-free money from a flexible spending account or health savings account for over-the-counter drugs without a prescription (except insulin). To get reimbursed from your FSA or HSA, ask your doctor for a prescription for any medications you use regularly, such as pain relievers, allergy medications, anti-fungals and cough-and-cold medicines, says Jody Dietel, of WageWorks, which administers FSAs for employers.
3. Use tools to comparison-shop prescriptions
Many insurers and employers have tools that help you compare prices for your medications, showing brand-name versions, generics and therapeutic alternatives. They also offer smartphone apps to look up the lowest-cost pharmacies before you leave the doctor’s office.
4. Use preferred pharmacies
More health plans are introducing preferred pharmacies, which cost even less than regular in-network pharmacies. For example, the Humana Walmart Rx plan for Medicare Part D charges a $1 co-payment for a 30-day supply of certain generic drugs purchased at Walmart or Sam’s Club (or a $0 co-payment through RightSource mail order), but the plan charges a $10 co-payment for the same drugs purchased at a nonpreferred network retail pharmacy.
For pricier “Tier 4” preferred brand-name drugs (there are a total of five pricing tiers), you’d pay 39 percent coinsurance through Walmart, Sam’s Club and RightSource but 50 percent coinsurance at nonpreferred network pharmacies.
5. Get your drugs through the mail
Mail-order pharmacies may provide a three-month supply of drugs for the same price as a one-month supply at a local pharmacy. Some plans require you to use mail order for maintenance drugs.
6. Switch to generic drugs
Generic drugs can cost as much as 80 percent less than their brand-name alternatives. The lower list price makes a huge difference when you’re in the plan’s deductible period and paying the full price out of your pocket. And the coinsurance rates are usually lower, too — often 10 percent to 15 percent of the cost for generics, 25 percent for preferred brand-name drugs, and 50 percent for nonpreferred brand-name drugs.
Some plans no longer cover certain brand-name drugs. For example, one popular health plan doesn’t cover Lipitor, which costs $180.75 for a 30-day supply of 10 mg tablets. But the generic equivalent, atorvastatin calcium, would cost $13.92 under the same plan, says Jim Yocum, executive vice-president of DRX, which provides Web-based prescription-drug comparison services to health plans and employers.
You may also get a good deal on generics at certain stores, such as Walmart and Target, which charge as little as $4 for a 30-day supply of certain drugs or $10 for a 90-day supply.
7. Keep an eye out for new generics
The patents for several popular brand-name drugs — Celebrex, Copaxone, Nexium, Actonel and Exforge — are scheduled to expire soon, which will open the door for drug companies to manufacture generic alternatives.
“It takes some time after patents expire for manufacturers of generics to receive approval from the U.S. Food and Drug Administration, make the drug and get supplies on drugstore shelves. Litigation can also delay expected patent expiration dates,” says Yocum.
You can look into generic alternatives now for Cymbalta, Maxalt, Maxalt MPT, Micardis, Micardis HCT, Twynsta and Xeloda, whose patents expired recently and for which generics are on the market, says Yocum.
Most insurers have Web tools or apps to help you look up generic alternatives to your drugs.
8. Pay for generics yourself
Some stores, such as Walmart and Target, charge as little as $4 for a 30-day supply of some drugs or $10 for a 90-day supply, while some insurance companies charge a $10 co-payment for a 30-day supply.
“Most generic medications cost less if you don’t use your insurance,” says David Belk, a physician in the San Francisco Bay area who lists drug prices and strategies for saving money on medical expenses at truecostofhealthcare.org. Belk especially likes Costco because it has an even longer list of generic drug deals.
9. Split your pills
Ask your doctor if you can save money by cutting your pills. Your physician will have to write a new prescription for twice the strength and half the quantity, noting your intent to split the tablets.
10. Get help from special drug programs
Go to the National Council on Aging’s Benefits Checkup site (benefitscheckup.org) and anonymously input basic information about your income, assets, medical conditions and drugs. You’ll see whether you qualify for any special programs to help with drug costs, such as drug manufacturers’ patient-assistance programs for low-income patients.
11. Find theraputic alternatives
Some brand-name drugs don’t have a generic equivalent but may have a “therapeutic alternative.” That means a medicine that’s in the same class of drugs but is chemically a little different. For example, Diovan is a blood-pressure drug with no direct generic substitute. In one popular plan, the monthly cost for a 30-day supply of 80 mg tablets is $149.66. But you could spend $1 per month for a comparable dose of iosartan potassium, or $2 per month for irbesartan, or $20 for a monthly supply of Benicar, says Yocum. Ask your doctor about any switch that isn’t a direct generic substitution.
Photo: The Javorac via Flickr