Enterprising Seniors Find Ways to Buy Drugs Cheaper
than Insurers
WASHINGTON, Nov. 19, 2003 - A key argument for
adding a prescription drug benefit to Medicare is that insurers obtain
significant price discounts not available to individual consumers who
pay out-of-pocket. But a new study from the National Center for Policy
Analysis (NCPA) finds that seniors on their own already pay prices as
low and often lower than the prices private insurers pay.
"If an insurance company is paying the bill,
seniors do not have much incentive to shop around," said NCPA Senior
Fellow Andrew Rettenmaier, who also is executive associate director of
the Private Enterprise Research Center (PERC) at Texas A&M University.
"But when they pay with their own money, they have an incentive to shop
aggressively."
The NCPA study examined prices of more than 36,000
prescriptions for the 39 drugs most commonly prescribed for Medicare
patients:
-- There is no significant difference between
prices paid by seniors with insurance coverage and those paid by seniors
spending their own money for 60 percent of the prescriptions.
-- Where price differences are significant, seniors
are twice as likely to pay less than private insurers.
The report notes other studies that indicate prices
vary greatly among retail pharmacies in the same cities, and that
seniors often can achieve significant savings by shopping around. Now
patients paying out-of-pocket can also achieve discounts by buying in
the national market via the Internet by mail order. The study also
examined prices of nearly 70,000 prescriptions for an expanded set of
229 prescription drugs and found similar results:
-- For close to three-quarters of the
prescriptions, third-party insurers did not pay significantly lower
prices.
-- Where prices differences were significant,
individuals again paid lower prices twice as often.
"When seniors spend their own money, they have an
incentive to search for lower prices," Rettenmaier added. "As a result,
they often pay prices as low or lower than insurance companies."
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The complete NCPA Report - "Who Pays Higher Prices
for Prescription Drugs?" - is available online at
http://www.ncpa.org/pub/st/st265/.
The NCPA is an internationally known nonprofit,
nonpartisan research institute with offices in Dallas and Washington, D.
C. that advocates private solutions to public policy problems. We depend
on the contributions of individuals, corporations and foundations that
share our mission. The NCPA accepts no government grants.
