Your medicine may come with a new side effect: financial pain. Prescription-drug spending grew 12.2% in 2014—five times as fast as the year before—according to the Centers for Medicare & Medicaid Services. And the sickest Americans bear the biggest burden. Some 43% of those in fair or poor health say it's somewhat or very difficult to afford their medications, and 37% say they've skipped out on filling a prescription because of cost, according to the Kaiser Family Foundation (KFF).
What has changed? Generic drugs, long an affordable alternative to name-brand medicines, have become part of the problem. The average price of the 50 most popular generic drugs increased 373% between 2010 and 2014, according to OptumRx, a pharmacy benefit management company. One culprit is consolidation: After a decade of mergers, three big companies now control 40% of the generics market, says Gerard Anderson, professor at the Johns Hopkins Bloomberg School of Public Health. Weaker competition means drug companies can charge your insurer more. Meanwhile, pricey new miracle drugs—like hepatitis C treatment Sovaldi ($1,000 per pill for an 84-pill course)—are also a key factor forcing up overall medication costs.
In response, insurers are making consumers pay more, and work harder, to get their prescriptions—if the drugs are even covered. "We're seeing plans limit the choices of drugs that are available," says Sandy Ageloff, senior consultant with Willis Towers Watson.
Fortunately, there are plenty of ways for you to save. By making strategic changes in the medications you take (with your doctor's okay, of course), the places you buy them, and the insurance plan you elect, you may be able to shave 40% or more off your total prescription-drug costs this year. Here are the steps you need to take.
CHANGE YOUR MEDICATION
1. Substitute generics for name brands.
First things first: If you haven't already, ask your doctor if you can try any generic versions of your prescription meds. Despite recent price increases, the savings can still be immense. On average, Americans on employer plans could have shelled out as much as 80% less in co-pays in 2015 by switching from a branded drug to a generic, according to KFF data. "The evidence is very strong that generics work just as well," says American College of Physicians president Wayne J. Riley.
2. Combine pills—or split them.
If you are taking several medications for the same condition, ask your physician if there's a single pill that would do the job. For example, your insurer could make you pay a combined $100 or more a month to get a brand-name beta-blocker and a brand-name thiazide diuretic to treat high blood pressure, Riley says. But most people, he says, can sub in a generic combination pill containing both medications, which will probably have a co-pay of less than $15.
Alternatively, you might be able to save money by splitting some pills, Riley says. You'll need to check with your physician, because not all doses can be divided safely—but once you've gotten the green light, ask for a prescription for half as many double-strength pills. Then buy a pill splitter and cut the tablets in two.
3. Check the formulary for your insurer's favorites.
The list of medications that any given drug plan will cover—called a formulary—has gotten much more complicated. As little as 15 years ago, most plans had no more than two tiers, or price categories. The two-tier plans would charge you one co-pay for generics and a second, higher one for brand-name drugs. By 2015, however, 81% of workers had three or more tiers in their prescription-drug benefits plan, and 23% had four or more, according to KFF. Obamacare and Medicare plans have multiple tiers too.
Generally, the higher the tier, the more you pay. While first-tier (usually generic) drug co-pays were just $11 on average in 2015, fourth-tier co-pays averaged $93 per prescription.
And co-insurance—in which you pay a fixed percentage of the price, rather than a set dollar amount—could push your out-of-pocket costs even higher. Among plans with three or more tiers, 40% required that patients pay co-insurance on pricier fourth-tier drugs, putting an average 32% of the cost on your shoulders.
"It can make for some confusion at the pharmacy counter," says Sharon Frazee, vice president of research and education at the Pharmacy Benefit Management Institute (PBMI). "If you don't know where the drug sits on the formulary, you don't know how much you're going to be charged."
Plans use tiers to lower costs. Your insurer will save money if you switch to a cheaper, clinically equivalent drug. The plan may also have negotiated better prices with one manufacturer by promising to charge more for the competition.
Either way, many plans offer incentives to switch. Show your doctor your formulary list and ask if there's another drug in a lower price tier that would work just as well for you.
4. Jump through your insurer's hoops.
In 2015, almost 70% of employers required, for at least some drugs, that you try over-the-counter, generic, or lower-cost versions before insurance would cover the pricier alternatives, according to a survey from PBMI. More than half of all employers required such "step therapy" for cholesterol-lowering drugs, for instance, up from 38% in 2010. This process can make it tricky for patients to get the expensive drugs their doctors have prescribed.
"A lot of health insurance companies are requiring that patients try three medications before they can get the one that their doctor originally recommended," says health care consultant Martine Ehrenclou.
If your drug has such restrictions, you'll get the bad news when you go to the pharmacy to fill your prescription. Work with your doctor to try the alternatives; if you ignore the rules altogether, you could get stuck with the full bill for your medication.