Prescription drugs have always been an integral part of healthcare, helping to manage symptoms, treat illnesses, and save lives. They can also be expensive, which begs the question: why do certain drugs cost so much, and how can customers save money while still receiving the best possible treatment?
According to TIME, 2014 was an expensive year for Americans taking pharmaceuticals. 4.3 billion prescriptions were filled last year, which cost customers a staggering $374 billion in all. Despite how important it is to our health, few are aware of exactly how the drug market works, what drives up prices, and how to save money on the prescriptions they need.
The Pharmaceutical Market: Lack of Government Regulation
The huge variability of prescription drug prices stems from one main cause — a lack of government regulation. While there are a huge variety of drugs to choose from, customers are often locked into one price point. Why? Unlike other consumer products, drug providers are rarely forced to compete with other brands.
This is because new drugs that hit the market are immediately placed under patent protection, preventing other pharmaceutical companies from manufacturing a similar drug under a different name until the patent expires 20 years later.
In theory, these patents inspire further research and development, and protect hard-earned research from getting stolen by a competitor. However, they often leave consumers stuck with sky-high prices.
And one of the biggest problems, according to the New York Times, is that the law essentially forces insurers to include each and every expensive drug in their policies, regardless of their efficacy or price.
This means that insurers are free to raise prices at any moment because they face no risk of losing any of their market share, and those prices are passed on to patients. By contrast, many insurers in Europe are free to reject high-priced products, which forces pharmaceutical companies to actually compete in a free market. As a result, prices are more reasonable overall.
What Are Generic Drugs?
Even so, consumers often have more options than they realize — mainly, they can choose generic drugs. These drugs offer a healthy level of competition and, in turn, lower prices because the patent has expired on the original, allowing other companies to enter the market as “generics.”
For example, the ADHD medication Ritalin can also be purchased under the brand names Ritalina and Rilatine, and often at a cheaper price.
That’s because the generic manufacturers are directly competing with name brands that sell nearly identical products. In the past, pharmaceutical patents generally lasted for around 20 years, but with the passage of the Affordable Care Act, a supplier can now only hold exclusive rights to a drug for a maximum of 12 years, according to the FDA.
And according to the Congressional Budget Office, generic drugs save consumers on average eight to ten billion dollars a year. So the next time your doctor writes you a prescription, make sure to ask whether it’s a new medication, and whether there’s a generic version available.
Beyond the option of going generic to save on prescriptions, patients often get stuck with outrageous prescription expenses because they’re unaware of a variety of other, more affordable options. For example, a great way to save money is to compare prices at different pharmacies — some will charge less for particular medications, and others may offer lower dispensing fees.
What many consumers don’t know is that having an insurance card might actually make your prescription more expensive. For example, many insurance plans include a traditional $10 copay on generic drugs. This may seem reasonable at first, but those same drugs might only cost around $3 for those who don’t go through insurance.
As a result, many customers are already turning to alternative methods to find the best prices. SingleCare isn’t an insurance provider, and doesn’t charge subscription fees or premiums. Instead, it lets you avoid insurance copayments altogether and treat pharmacies as providers, which turns into discounts on prescriptions ranging from 30% to 70%.
Many Americans feel like they don’t have a choice when it comes to filling their prescriptions. But SingleCare provides a more transparent and affordable way to get the medications we need.
(Main image credit: StockPholio)