Savvy Consumerism Is Antidote to High Drug Costs

Published February 1, 2007

Americans have long complained about the high cost of prescription drugs. But a common-sense solution is available to everyone: smart shopping.

In extreme cases, consumers can reduce the cost of some common drug therapies by more than 90 percent if they use the same buying techniques they routinely use when shopping for other goods and services.

The National Association of Chain Drug Stores estimates 3.38 billion retail prescriptions were written in 2005. The average cost of those prescriptions was $64.86–$29.82 for generic prescriptions, compared to $101.71 for branded medications.

The most common technique for saving a few dollars on prescriptions is to ask for generic drugs, which work well and cost 20 percent to 80 percent less.

Consumers in nearly all states now benefit from Wal-Mart’s new drug plan, which sells 30-day supplies of 150 prescription drugs for $4 apiece.

Generic Drugs

In addition, consumers should not overlook over-the-counter (OTC) drugs as an alternative to prescription drugs. The Consumer Healthcare Products Association, the trade group representing the OTC drug industry, reports on its Web site that consumers have access to more than 700 medications that were available only by prescription 30 years ago.

Newer non-sedating prescription antihistamines, for example, cost $1.30 to $2.70 per day. The OTC antihistamine loratadine once required a prescription and cost more than $1,000 annually. It’s now available OTC for as little as five cents per daily dose at Sam’s Club.

Generic Benadryl sells for even less. Common pain relievers such as naproxen and ibuprofen work just as well as more expensive drugs like Celebrex, but are thought to cause greater stomach irritation. The OTC pain relievers, however, cost approximately $40 to $50 annually, compared to nearly $1,000 for Celebrex.

A December 2002 New England Journal of Medicine study found that combining the older drugs with Prilosec ($250 per year) mimics the results of Celebrex.

Varying Prices

The Internet is a patient’s most valuable information tool for comparing prices or learning about drug interactions. A patient with a prescription can find a range of prices by clicking on a few Internet pharmacy Web sites and search for less-expensive drug therapies.

Any given condition has numerous drug therapies, but the drugs’ prices often vary widely. Patients should discuss drug therapy choices with their physicians, including whether cheaper alternatives are available. They often are.

According to the September 13, 2004 edition of the Archives of Internal Medicine, 72 percent of chronically ill patients found discussing drug costs with their doctors helpful. Afterward, their doctors switched them to lower-cost alternatives 69 percent of the time.

The Web site, founded by a cardiologist, helps patients select affordable drugs. Toby Rogers, vice president of DestinationRx, owner of Rxaminer, said Web-based tools should be used to enhance the interaction between patient and physician.

“We feel the Rxaminer tool by DestinationRx does this by providing the patient with a good balance of cost and quality information on available lower cost medications,” Rogers said.

New Solutions

Another common-sense tip for consumers wanting to save money on drugs is to compare prices at different pharmacies.

Many people assume drug prices are uniform and do not bother to comparison shop, when in fact prices vary considerably. A 2002 Public Issue Management survey found prudent shopping among local pharmacies saved consumers almost 10 percent on brand-name drugs and a whopping 81 percent on generics, on average. Public Issue Management is a government grassroots campaign development firm based in St. Paul, Minnesota.

Health plans often include drug coverage, but the uninsured lack easy access to negotiated discounts. Jim Robbins decided to change that when he started PS Card (Prescription Savings Card) in 2006. PS Card is a discount drug savings card aligned with a pharmacy benefit management (PBM) company.

Because PBMs are large drug purchasers, they can obtain price breaks similar to those received by health plans. Pharmacies work with PBMs because they want the business a large customer can deliver.

“Why should the people least able to afford their prescriptions pay so much more than people with insurance?” Robbins asked. “I started PS Card to fix this problem.”

The free PS Card, available at, is accepted at 53,000 pharmacies nationwide.

The company earns a nominal referral fee for each transaction from the PBM that runs the program. PS Card strives to boost revenue by reaching as many consumers as possible. Enrollees can use the online pricing tool to order drugs by mail, find alternatives, or compare prices in the ZIP code of their choice.

Internet Savvy

A November 2006 survey by the Kaiser Family Foundation found enrollees of consumer-driven health care (CDHC) plans compare prices of drugs online twice as often as those in traditional plans. Gary Claxton, a Kaiser Family Foundation vice president and director of its Marketplace Project, speculated CDHC enrollees might compare drug prices online because they have easy access to the information there.

“One reason could be that insurers are far more likely to have real prices for drugs online than real prices for providers,” Claxton said.

Buying in Bulk

Another technique to lower drug spending is bulk buying. All supermarket patrons know that larger packages usually lower the unit cost. The same is true for drugs.

Pills purchased 90 or 100 at a time usually sell for much less per dose than those bought 30 at a time. This is especially true for generic drugs ordered from mail-order pharmacies.

To save money, patients also sometimes split pills. This involves purchasing medications in doses double the prescribed amount, and splitting them in half. Savings of 30 percent to 50 percent are common, because many medications are sold for about the same price regardless of dosage.

How much can patients expect to save by using these techniques? A review of Web-based pharmacy prices found the cardiovascular drug Tenormin (50 mg) costs about $500 per year if purchased monthly.

But patients can save 80 percent by switching to the generic alternative, atenolol, and even more by purchasing in bulk (100 at a time) or buying larger, 100 mg pills and splitting them in half. At an annual cost of $20.63, this last option is 96 percent less expensive than the highest-cost option.

Devon M. Herrick, Ph.D. ([email protected]) is a health economist and senior fellow at the National Center for Policy Analysis.

For more information …

Consumer Health Care Products Association, tistics/OTCFactsandFigures.htm

John D. Piette, Michele Heisler, and Todd H. Wagner, “Cost-Related Medication Underuse: Do Patients with Chronic Illnesses Tell Their Doctors?” Archives of Internal Medicine, Vol. 164, No. 16, September 13, 2004, pages 1,749-1,755,

Francis K.L. Chan et al., “Celecoxib versus Diclofenac and Omeprazole in Reducing the Risk of Recurrent Ulcer Bleeding in Patients with Arthritis,” New England Journal of Medicine, Vol. 347, No. 26, December 26, 2002, pages 2, 104-10,

M.B. Kimmey and A. Lanas, “Appropriate Use of Proton Pump Inhibitors with Traditional Nonsteroidal Anti-inflammatory Drugs and COX-2 Selective Inhibitors,” Alimentary Pharmacology & Therapeutics, Vol. 19, No. 1, February 2004, pages 60-65,,

“2002 Missouri Prescription Drug Pricing Survey,” Public Issue Management, 2002,

“National Survey on Enrollees in Consumer Driven Health Care Plans,” Kaiser Family Foundation, November 2006,