Are you paying too much for prescription drugs?

Through the recession and recent debate in Washington over cutting Medicare, Medicaid or even Social Security, an overlooked aspect of the health care industry has been the escalating cost of prescription drugs. In fact, Time Magazine in 2004 said that prescription drug prices are higher in the United States than any other developed nation; Fortune 500 surveys consistently show pharmaceutical companies as the most profit-generating businesses.

Although pharmaceuticals only account for approximately 13% of total health care costs, many consumers justifiably feel swindled when leaving pharmacies.

Statistics and Causes of High Prices

The high cost of research and development and the pharmaceutical industry's lobbying power largely account for obscene prescription drug costs. Luckily, there are some third-party providers like Medicare that negotiate prices on behalf of consumers. That said, the monthly cost of prescription drugs can still overwhelm the disabled, elderly and families.

Prescription drugs

Consumer Reports recently showed that an increasing number of Americans who should be taking certain medications are unable to do so because of ballooning costs. Over half of individuals under 65 who have no drug coverage are unable to fill basic prescriptions.

Without private insurance or third-party providers like Medicare negotiating for these slighted Americans, the option effectively becomes cut back on groceries and gas or take one's chances without prescription medication.

The silver lining is that since prices for generic drugs are considerably cheaper than prescription drugs in the United States, consumers are advised to save potentially thousands of dollars per year replacing high-cost prescription drugs with cheaper, generic alternatives.

Are Prescription Drugs Reasonably Priced?

The Affordable Care Act hopes to curtail the escalating prices of prescription drugs; but, to establish a starting point, US consumers spent over $250 billion on prescription drugs in 2010 alone. Clearly, though, with 90% of seniors taking some kind of prescription drug coupled with the fact that seniors often collect scant pensions or work part-time, something needs to be done to rein in the cost of prescription drugs.

Although almost all private insurance services provide some prescription drug coverage, many of these policies operate on a "tiering" policy that discourages or precludes low-income Americans from obtaining high-end prescription drugs. Obviously, such a set-up causes problems for low-income Americans and seniors, especially considering some disorders only have prescription drug treatments and no generic drug alternative.

Even among relatively financially stable, non-senior adults, over 11% forewent or delayed filling a prescription due to cost. There are publicly-available options to take the sting out of a trip to the pharmacy, however.

Medicare and Medicaid Save the Day

The Medicare outpatient drug program went into effect under George W. Bush in early 2006. The prescription drug component of Medicare, Medicare Part D, helps low-income seniors defer escalating prescription drug costs. Subsidies for Medicare's prescription drug plan rose to $60 billion in 2011, according to the Congressional Budget Office. These numbers indicate significant prescription drug savings for seniors and their families.

Medicaid, on the other hand, is specifically tailored to low-income individuals of all age ranges. Copayments for prescription drugs vary on Medicaid plans vis-a-vis state. The Section 340B program of Medicaid forces drug companies to negotiate prices with the government and give preferential prices to community health centers.

Although the reasons for high prescription drug prices are multifaceted, solutions for cutting monthly drug costs are equally varied. When generic alternatives are available, consumers are well-advised to replace expensive prescription drugs with generic alternatives. Furthermore, most private health insurance features some deferment of prescription drug costs. While not perfect, these strategies can help to lower expenses spent on drugs every month.