Cost of Prescription Drugs Causing Consumer Headaches

By Amir Zaman, WEA Insurance employee benefits specialist

May 1996

Cost of prescription drugs causing consumer headaches

Economists have all but declared inflation dead because prices of most items are either rising at a snail's pace or not at all. However, the cost of prescription drugs is picking up steam. Prices for the top 500 outpatient drugs increased 4.6% last year, the highest level since 1992, according to the National Association of Chain Drug Stores. By comparison, the general inflation rate was only 2.5% in 1995.

Drug companies held down price increases in recent years largely because of the "Hillary Factor." The term refers to the effect the Clinton administration's health care reform efforts had on the cost of prescription drugs and medical services. Accused of being cold-hearted profit-mongers, drug manufacturers limited their annual price increases. Now that public outcry and congressional inquiries into drug price inflation have died down, companies are gearing up to recapture price increases they put off the last couple of years. In 1995, for example, the price of pharmaceutical company stocks rose an astounding 52.3% in anticipation of rising profits.

In fact, the cost of prescription drugs has become a significant portion of your total monthly health insurance premium. For example, if you're covered by a WEA Insurance health plan, about 15% of your monthly premium goes to cover the cost of prescription drugs. If you have one of our medical plans for retirees, 50% of your monthly premium goes to pay for drugs.

Generic drugs can save money

One way to save yourself and your group health plan some money is to use generic prescription drugs whenever possible. Generic drugs cost substantially less than brand-name drugs. For example, the average wholesale price for Valium 5 mg is $37.50, while the generic equivalent can be bought for $1.43. Generics are not available for all brand name drugs, but almost 80% of brand-name drugs have generic equivalents.

While millions of people have been safely using generic drugs for years, a few people still have misgivings about their quality. Those misgivings are largely unfounded because the Food and Drug Administration (FDA) approves both brand name and generic drugs.

To gain FDA approval, a generic drug must be chemically identical to the brand name drug it replicates. In addition, for a generic to be regarded as interchangeable with the original, its active ingredients must be identical, and the generic must be the bioequivalent of the original. Bio-equivalency means the active ingredients in a generic must be absorbed by the body at the same rate and with the same effects as a brand name. Generic drugs may look different than their brand name counterparts because the inactive ingredients (such as fillers, colorings, and flavorings) may be different between the two.

Of course, there are occasions when a physician will not want a generic to be substituted for a brand name drug for medical reasons. For example, certain potent drugs for such illnesses as epilepsy and asthma require a careful trial-and-error approach to pinpoint a drug with a dosage that's both safe and effective. Once a drug is pinpointed, it's unlikely the doctor will want to change brands. In these cases, the doctor will order the pharmacist to "Dispense As Written" on the prescription.

As a consumer, you should understand that one reason many physicians may prescribe brand name drugs — when a safe generic is available — is force of habit. Brand name drugs come on the market first and can have patent protection for as long as 17 years. Physicians, therefore, may become accustomed to prescribing the brand and may not think of the generic.

However, you should also keep in mind that people may react differently to different drugs. That's true whether you're starting on a brand-name drug or a generic equivalent. If you're concerned about switching to a generic, it's best to ask your physician for an opinion.

Order prescription drugs by mail

Prescription drugs by mail If you're covered by a WEA Insurance health plan, you can now order prescription drugs through the mail. Here's how to do it:

• Pick up a mail-order enrollment packet. This packet can be obtained at your school office or by calling WEA Insurance (1-800-279-4000).
• The first time you use the mail-order program, you'll need to complete a very simple family profile form which is included in your package. You only have to fill this form out once and mail it with your prescription.
• Medications will be delivered to your home, postage-paid, 10 to 14 days after you mail your order. Your prescription will include a convenient reminder of when you need to reorder.
• To reorder, complete the order form provided in the packet or call ProVantage at the toll-free number indicated on the form. Delivery time is cut in half when reordering by phone.

Using the mail-order program is especially convenient if you take maintenance drugs. These are drugs that are taken on a continual basis, such as high blood pressure medications or oral contraceptives. You may receive up to a 90-day supply when you purchase maintenance drugs. Make sure to ask your doctor to specify a prescription for a 90-day supply.

If you would like more information about how the mail-order prescription drug program works or have a question about your prescription drug benefits, please call WEA Insurance at 1-800-279-4000.