Saving Prescription Dollars the Bulk Way

bondarantpharmjbmThere’s a strange new addiction sweeping across the heartland. Unsuspecting addicts are lured in by word-of-mouth promises of unbeatable prices, made to feel exclusive with a membership card, and turned loose upon shelves and shelves of merchandise. But while the initial high of savings may be thrilling, the addiction always spirals out of control, until the poor victims find themselves with 25 pounds of peanut butter and 300 boxes of Cheez-Its overflowing their pantry.

Warehouse club stores such as Costco or Sam’s Club have changed the way people shop for daily items like groceries and cosmetics, teaching them the financial joys and storage dangers of buying in bulk. But the savings associated with buying large quantities – so long as those 25 pounds of peanut butter are used up before they went bad – are undeniable. So it was only a matter of time before the bulk-buying strategy crossed over to another market where cost-cutting is sorely needed: health care.

One place where people feel the most pain from health care costs is prescription drugs. Even though the cost of pills only makes up about 10% of total medical costs, there’s something dispiriting about having to throw down $20 bills – or even hundreds of dollars – on a monthly basis at the pharmacy to fill one’s regular medications. As such, many experts have recommended buying prescriptions in 3-month quantities rather than 1-month installments, a switch that retailers such as Walgreen’s, Target, and yes, Costco have thrown their support behind.

But while buying three months of pills at a time instead of one made intuitive sense, nobody had bothered to actually quantify just how much individuals and their insurance companies could save from such a strategy. Atonu Rabbani and G. Caleb Alexander of the University of Chicago Medical Center stepped into that breach with a paper published this month in the journal Applied Health Economics and Health Policy, calculating that 3-month prescriptions can give both individuals and the health care system a little more pocket change in tight times.

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Per person per month, the savings of receiving 3-month prescription supplies rather than the 1-month variety saved people the modest sum of $5.91. But in some places, that’s still a matinee movie, and over the course of a year, it’s about $70 – a nice dinner-for-two out, for sure. Total costs per month also drop by 18 percent ($7.81), which means both you and your insurance company will be happier on a monthly basis.

But the real eye-popping numbers come when you aggregate those savings across the nearly 3000 people analyzed in the study. Suddenly, those savings don’t seem so paltry any more, as $196.5 million could be saved, $148.6 million of that going back in-pocket from saved out-of-pocket expenses. Considering that we’re only talking about a small sliver of the American drug-taking population, that’s quite the impact upon a system that needs good news right now.

“These savings may not seem large to some, but they could help trim the cost of health care, which is especially important given the nationwide debate about how to finance health care reform,” Alexander, an assistant professor of medicine, told my colleague Greg Borzo. “No matter what any health care reform package looks like, millions of Americans are burdened by prescription drugs costs, and this is one important way to help relieve that burden.”

Alexander says that further costs could be saved by prescribing more generic drugs and obtaining drugs via mail-order, which often already dispense prescriptions in 3-month batches. And while those improvements may only affect a fraction of the thin slice of the health-care pie that is pharmaceutical costs, Alexander proposed that a slight reduction in drug prices could create a domino effect that helps other parts of the health care sector trim costs.

“We know that anywhere from 20 to 30 percent of Americans that take medicines for chronic conditions report having skipped or stretched a medicine during the previous 12 months because of the cost of that medicine,” Alexander told MedPage Today in the video posted above. “If we could reduce the cost of prescription medicines for individuals, we can increase their adherence, and this will likely have an important impact on downstream health care costs such as unnecessary use of emergency departments and unnecessary hospitalizations.”

So the data lends evidence to the notion that stocking up on Lipitor and Celebrex in the same way one would stockpile Fruit Loops and Q-Tips could be a boon to both the individual consumer and the industry at large.

“Filling a three month rather than a one month supply is a win-win situation,” Alexander said. “It reduces total prescription costs and it also reduces the costs for individuals.”

About Rob Mitchum (526 Articles)

Rob Mitchum is communications manager at the Computation Institute, a joint initiative between The University of Chicago and Argonne National Laboratory.

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