The crisis in the cost of medicines in America is well-known. Americans spend more on prescription drugs — average costs are about $1,100 per person per year — than spent anywhere else in the world. And the prices can be staggeringly high. For example, cancer drugs in the U.S. routinely cost $10,000 a month.
These costs are often not directly borne by the average American who has insurance coverage. Generally speaking, private insurers and government programs pick up the biggest share of the bill. However, high drug costs directly impact health care premiums and taxes – both of which are rising.
Those rising costs impact the financial stability of the nation. Why is this the case? Unlike other countries, the U.S. doesn’t directly regulate medicine prices. In Europe, governments negotiate directly with drug makers to limit the cost to their state-funded health systems. In the U.S., drug companies can more or less set whatever price the market will bear for those receiving medicine through the Medicare program. Private payors, such as employer health plans, typically negotiate discounts for their enrollees.
As a result, patients in the U.S. directly pay about 17 percent of prescription medicine costs out of their own pockets. In a 2013 survey, one in five adults in the U.S. said they failed to complete a prescribed course of medicine because of cost. The figure was one in ten in Germany, Canada and Australia.
If private employers negotiate for the price of medicines and states limit drug choices to help offset costs, who looks out for those without health insurance coverage or for seniors whose costs aren’t fully covered under Medicare Part D?
Other than possible help offered by drug companies or pharmacies, New Yorkers without coverage are left to comparison shop for the lowest drug prices. The state of New York tries to assist that effort by collecting drug prices for the most widely prescribed drugs.
Under New York law, the state Health Department has created a website to allow consumers to comparison shop for the most frequently prescribed medicines. The website allows consumers to search as many as six medications simultaneously by zip code, county or city. For consumers who lack adequate coverage for prescription drugs, the Department’s website could yield considerable savings. The law also requires that at the checkout area of each pharmacy a written notice must be provided informing consumers about the availability of the website. (The website can be found at: https://apps.health.ny.gov/pdpw/SearchDrugs/Home.action.)
The need that could be filled by this program is real. According to recent U.S. Census information, over one million New Yorkers lack health insurance, meaning they must pay full retail price for prescriptions, and – as mentioned earlier – seniors in the Medicare “doughnut hole” also face cost pressures for medicines.
A recent review of what pharmacies are charging showed a shockingly large range in retail prices across the state. In fact, a recent survey of prices posted on the state Health Department’s website by the New York Public Interest Research Group, in some cases consumers could be paying as much as $200 more for the exact same prescription in the exact same region.
NYPIRG reviewed fourteen regions of the state and examined the prices for six of the most frequently prescribed medications. NYPIRG found an enormous range in prices charged, with the greatest disparity of $207 in prices for Advair Discus in Manhattan. In the city of Albany, the drug Advair Discus had the greatest range in price – a difference of nearly $154.
Clearly, it pays for consumers to shop smart. Yet, those comparisons only work if the public knows of the existence of the program. Under New York State law, each pharmacy is required to post a sign alerting the public to the drug pricing website. Yet, when NYPIRG spot checked that requirement, it found that only about 40 percent of the pharmacies had the required signage.
Given that at least one million New Yorkers need to know the costs of their medicines, the state must do better. If costs are too high, those who can’t afford medications often go without. Not taking needed medicines can result in devastating consequences.
Of course, expanding coverage is the best response, but in the meantime, New York must make sure that this program works. New York should publicize the website, make sure pharmacies are conspicuously displaying the website information and come up with an easier-to-remember website address so the program can benefit all New Yorkers who could use some help shopping for prescriptions.
Blair Horner is executive director of the New York Public Interest Research Group.
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