Big Pharma & Drug Cartels.

We have recently completed open enrollment for Medicare Part D. This is the time we assist our clients who are on Medicare with choosing their coverage for prescription drugs. This year, I had to qualify much of my advice due to all the complexities, dare I say scams, in the prescription drug game.

The fact that there is no transparency in health care is especially evident when looking at Rx. Running a prescription drug report on the Medicare website shows wide variations in negotiated rate or retail cost of a drug between different plans. In the past, this was primarily the case on brand name drugs but now we are seeing it on generics as well.

In the past, I could advise a client to choose generic drugs, if it was appropriate, as a way to reduce costs. That is not always the case now.

The Medicare Part D prescription drug plan is based on a flawed design feature. While the four phases of coverage can be a little awkward, they are really not that difficult to understand. They are: deductible, initial coverage, gap or “donut hole” and catastrophic.

The biggest design flaw is in the Gap or donut hole, where the manufacturer is required to give a discount on covered brand name drugs. This year the discount increased to 70%. On the face that sounds good, right? Everyone wants a 70% discount. There is no restriction on the price that the manufacturer can charge, so it’s not difficult to see that the price can be raised, then the discount applied. The end result is that you are really no better off.

I fully understand we are a capitalist society. I am a business owner. I own stock in other companies as a way to grow wealth. That is the system. Profit is not a dirty word. But are there limits?

A recent article in the Washington Post disclosed an investigation of alleged price fixing involving 16 companies and 300 generic drugs. One example is the price of albuterol, a common asthma medication that increased from 13 cents to $4.70 per tablet- a 3400% increase!

The article states that two former executives of one of the bigger companies have pleaded guilty to criminal charges. My hope is that they are given maximum sentences. This type of behavior is simply unconscionable.

As consumers, we are far down on the food chain and have limited options to stretch our hard earned dollars. Here is the advice I give my clients.

After we run the Rx report, consider re-running it yourself using different pharmacies. Look at sites such as GoodRx.com to get an idea of different prices and coupons available to you. Consider Canadian pharmacies. Finally and most importantly, ask your pharmacist if there is a more cost effective way to buy your particular medication.

The “gag order” that prohibited pharmacists from informing clients of better pricing options was lifted for private insurance in 2018 and to Medicare plans in January 2020. I do not understand the reasons for delay and I suspect pharmacists are frustrated by it as well. However, the law allows the pharmacist to answer, if the Medicare consumer asks the question. Sort of a silly game, but one you might want to play.

Also, should you find that it is cheaper to buy your Rx outside of your plan, you may still submit the claim to your insurance company to have it credited toward your out of pocket maximum, (assuming it is on the plan’s formulary). Contact the 800# on your ID card to ask the insurer how to submit the claim.

The saying Caveat emptor or “Let the buyer beware!” is no more evident than in health care.

Margaret R. Beck

Margaret Beck CLU, ChFC, CEBS started her insurance practice in Redding in 1978. She founded Affiliated Benefit Services.

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