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Making Your Money Last

Knock Down Your Drug Costs

You can slash your prescription-drug costs by employing a number of simple strategies.

EDITOR'S NOTE: This article was originally published in the February 2008 issue of Kiplinger's Retirement Report. To subscribe, click here.

This year, Maryann Allen, 53, a secretary who lives in Boston, will be able to slash her prescription-drug costs by taking a few simple steps. In addition to switching to generics for the three drugs she takes, she's buying her cholesterol and thyroid medicines in bulk by mail order. She also found a good deal at a nearby pharmacy for her diabetes drug by using her health plan's Web-based drug-pricing tool. As a result, her bill this year for her three drugs will be $384, instead of $2,160 without using such strategies.

Allen says buying brand-name drugs at retail pharmacies for the seven drugs she and her husband, David, 61, take "would break the bank." Case in point: Maryann and David each take a generic drug for high cholesterol, paying $60 every three months by mail order. Ordering the brand-name version by mail would cost $220 each time. At a pharmacy, the Allens would pay $360 for the brand-name drug, based on their health plan's co-payments. They save $1,200 a year on this one drug by going generic and ordering by mail.

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Health-Care Shock in Retirement

Whether you have private health insurance or a Medicare Part D prescription-drug plan, the cost of drugs can put a big dent in your budget. In 2006, retail U.S. drug spending rose 8.5%, according to the government. About 40% of seniors take five or more medications.

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Even Medicare's benefit can't shield beneficiaries from high costs. A married couple who falls into the infamous "doughnut hole," when seniors must pay 100% of their drug costs, could pay as much as $6,400 a year. And that doesn't count their costs before reaching the doughnut hole.

You can protect your nest egg by pursuing a number of relatively easy strategies. Consumers must be willing to talk with their doctors and do a little legwork to find the best deals.

As the Allens found, using generics, ordering by mail and buying in bulk can reap big savings. Doctors tend to prescribe the newest brand-name drugs, but ask your physician to prescribe a generic. The average retail price for a generic drug in 2006 was about $32, compared with $111 for a brand-name drug, according to the National Association of Chain Drug Stores. The federal Food and Drug Administration found that patients who can replace all their medicines with generics can cut costs by more than half. The FDA guarantees that generics work just as well and are just as safe as brand-name drugs. Three-fourths of the FDA-approved drugs now have generic counterparts.

Whether you stick with a brand-name drug or switch to a generic, consider ordering by mail. Your savings will depend on your health plan. Last year, a study of two large pharmacy-benefit plans in Texas showed that members who ordered brand-name drugs by mail saved between 29% and 37% over what they would have paid at local pharmacies. You can boost your savings even more if you also order three months' worth of drugs. If you prefer to shop at the local pharmacy, ask your health plan about obtaining a 90-day supply. Make sure you first determine side effects and the appropriate dose level.

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Chat With Your Doctor

Doctors can often help you cut your drug bill if they know that costs are a problem. Maryann Allen's doctor switched her to generics after she approached him. "When the pills got really pricey, I talked to my doctor," says Allen. "He understands that paychecks don't go up for everybody." A recent study of 17,000 seniors reported in the Annals of Internal Medicine found that "people are about five times more likely to get switched to a lower-cost medicine if they discuss costs," says Ira Wilson, the study author and professor of medicine at Tufts-New England Medical Center in Boston.

Another cost-cutting measure that a doctor can employ is to switch a medication to a lower-cost one within the same class of drugs or to move a patient to a different class altogether. For instance, both Protonix and the less-expensive over-the-counter Prilosec treat gastrointestinal ailments.

Drug firms and pharmacies typically don't charge higher prices for stronger doses of the same medicine. So ask your doctor about pill splitting. When Robert Brown, 73, a retired banker who lives in Baltimore, was diagnosed with heart and lung problems last year, he had not signed up for Medicare Part D. So he had to pay for his seven drugs out of pocket. Brown only needs 20-milligram tablets of a generic drug he's taking, but he buys 40-milligram doses, enabling him to get two months' worth of drugs for one month's price. His doctor advised him to split the pill. Certain drugs -- such as non-tablet medicines, timed-release medicines, blood thinners and certain cancer drugs -- can be dangerous if split. So consult your doctor first.

Also ask your doctor or pharmacist to review your medications list. Taking unneeded or duplicative medicines "is going to raise your drug costs," says Thomas Clark, director of policy and advocacy for the American Society of Consultant Pharmacists. Often one doctor doesn't know what another is prescribing for you. More than half of seniors on medication have two or more prescribing doctors, and more than one-third of seniors fill their medicines at more than one pharmacy, according to research.

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A medication review could also lead to smaller doses, which would cut costs. As the body ages, medication side effects can become more serious. "We don't need the same dose when we get older," says Nicole Brandt, an assistant professor of geriatric pharmacotherapy at the University of Maryland. Moreover, studies show that about one-fifth of older adults use at least one inappropriate drug. Drugs such as barbiturates or diazepam are not suitable for seniors. See a list of potentially inappropriate drugs at www.dcri.duke.edu/ccge.

Many patients spend more than necessary because they continue to take drugs that were intended for short-term use. For example, taking sleeping pills long after you need them is like throwing money away. Patients may be put on a drug while in the hospital, such as Prilosec to reduce gastrointestinal bleeding, but the physician may forget to tell them to stop. Clark says that patients "assume they need it and just keep on taking it."

Besides helping to cut costs, an annual review of your medicines can help you avoid potential problems, such as an increased risk of bleeding when one doctor prescribes a blood thinner and another gives you a non-steroidal anti-inflammatory medication. "The starting point for any person, particularly for older patients, is to have a comprehensive review of their drugs," says Clark. The society provides tips at www.seniorcarepharmacist.com.

Shop for the Best Deals

Before Robert Brown from Baltimore signed up for Medicare Part D, one brand-name respiratory drug he had to take ran as high as $260 a month. He found the best deal at a local Wal-Mart for $206. "Safeway was cheaper than Walgreens, but Wal-Mart was the cheapest," he says.

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Wal-Mart and Target both sell certain generics for $4 for each 30-day supply. The Medicare Rights Center has a list of drug-related Web sites (www.medicarerights.org, click "Discount Rx Resources"). Some states offer Web sites that show what drugs cost at various pharmacies; New York offers www.nyagrx.org, and Florida sponsors www.myfloridarx.com. Choose a single pharmacy or mail-order house for the cheapest overall costs. Using multiple pharmacies to get the best deals on each drug could lead to medication mistakes.

Ask your health plan to suggest ways that you could reduce costs. Brown joined Humana's Enhanced Medicare Prescription Drug Plan this year, and he found that it provides free generics to members who use mail order. Also, check if your health plan has negotiated deals with certain pharmacies. Many plans offer tools that will point you to the cheapest pharmacies.

Make sure you compare Medicare Part D plans each year during open enrollment starting in mid November. Plans differ in which drugs they'll pay for, what those drugs will cost and which pharmacies a member must use. Check a plan's co-payments as well as the premium. You can compare plans at Medicare.gov and PartDOptimizer.com.

Drug discount cards can also lower costs. Certain states, health insurers, pharmacies and stores offer such cards with moderate to substantial savings on certain medicines. Meanwhile, if you have no coverage and face substantial costs, search out assistance programs through RxAssist (www.rxassist.org; 401-729-3284) or Partnership for Prescription Assistance (www.pparx.org; 888-477-2669).

If you want to buy drugs on the Internet, proceed with caution. Look for sites that are "verified Internet pharmacy practice sites," or VIPPS, a program of the National Association of Boards of Pharmacy (for a list, go to http://vipps.nabp.net/verify.asp). Steer clear if no hard copy of the prescription is required, there is no way to contact a person by telephone and prices are significantly less than anywhere else. The FDA provides tips for buying online at www.fda.gov/buyonlineguide.

Also be careful when buying drugs abroad, especially online. Even sites that are based in Canada may be getting the medicines from other nations. Although it's illegal to import drugs from Canada, the federal government has stopped seizing medicines mailed into the U.S. from Canadian Web sites when packages contain 30- or 90-day supplies.

For more tips on ways to cut drug costs, including information on individual medications, visit Consumer Reports Best Buy Drugs (www.crbestbuydrugs.org), DestinationRx (www.destinationrx.com) and Pillbot.com.