How to Cut Your Drug Costs

Shopping for better prices and insurance deals at least once a year will help hold down your costs.

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Drug price inflation seems impervious to market forces, even during this very weak recovery. So it makes sense to do a thorough review of your drug costs at least once a year. Next year's Medicare coverage decisions seem far, far away but that annual renewal or, for first-timers, initial election period, will be here before you know it.

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The first step is to know what you're paying for all your prescription drugs right now. You'll need a list of the drugs and your recommended dosages. If you don't have this information, you should be able to get it from your insurance plan, either using online tools or by calling them.

Next, find out if there are any generic versions of branded drugs on this list. Most health plans require you to take a generic if there's one available that is equivalent to the branded drug you've been prescribed. If that's not the case, you may be able to switch to a generic. Before doing so, make sure your doctor approves—sometimes physicians believe patients should continue taking branded versions of a drug. Their views usually overrule drug-plan rules on generics.

Once you have a "final' list of your prescription drugs, including any generic substitutes, make sure you're purchasing these drugs in the most economical manner. This normally means using your health plan's mail-order pharmacy and getting 90-day supplies sent to you. If you haven't taken full advantage of this service, look into rolling over your renewals into these cheaper, longer-term prescriptions.

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You also can take this list and use it on the Medicare website to find out if there is a better insurance plan for your needs. Besides different premiums, plans may also charge different amounts for drugs, and have different co-pay and out-of-pocket limits. As you review plans, consider the list of big branded drugs set to lose patent protection in the next 18 months, opening the way to much cheaper generics.

Inexpensive generic drug programs at discount and chain pharmacies have become commonplace during the past few years. Even if you're satisfied with your Medicare prescription drug plan, it may not always provide you the best price.

Wal-Mart set the mark for such programs a few years back by offering selected generics for $4 for a 30-day supply and $10 for a 90-day supply. These "4/10" programs have become standard at other discounters, sometimes with slight changes to the quantities and standard prices.

Here are details of the generic programs from several large discount chains. A particular pharmacy might not have an outlet you find convenient, so you'll want to check on their locations.

CVS

Kroger

Target

Walgreens

Wal-Mart

PharmacyChecker.com compares prices of mail-order pharmacies, and can help you find the lowest posted prices. The biggest variations are for branded drugs, and most of the lowest-cost pharmacies are in Canada.

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It is illegal for Americans to buy drugs from Canada, but that hasn't stopped them. "Over the past decade millions of Americans have ignored U.S. law to seek cheaper prices from Canada, most often by mail order," AARP said in March. At that time, to cite one example, it found Canadian prices for the popular cholesterol-lowering drug Lipitor were roughly a third of the U.S. price, which was about $156 for a 30-day supply.

At a recent hearing of the Senate's Special Committee on Aging, chairman Herb Kohl, a Democrat from Wisconsin, cited research that U.S. drug prices are 30 percent higher than in other industrial nations. This differential amounts to $300 billion in higher annual drug costs in the United States, with a third of that amount paid out by Medicare or Medicaid. Permitting Medicare to negotiate with drug companies for lower prices, which is presently not legal, could sharply reduce those costs.

Other details:

• The U.S. Food and Drug Administration has a generic equivalency tool if you have questions about whether there is a generic version of a branded drug.

• If your pharmacy is not in a 4/10 program or its equivalent, call anyway to see if it will match the price of a generic sold by one of the major chains.

• Check out mail-order services that might give you comparable or better generic prices and also save you the time and expense of picking up your medications.

Finally, do your homework before you sign up for 2012 health coverage. Whether your drugs are covered by a private plan or through Medicare's Part D prescription drug program, knowing what you might obtain via low-cost generic programs can help you make better decisions on your coverage.

Twitter: @PhilMoeller