Cutting the cost of medications | Compare the Market
 
 
 
 
 

Pharmacoeconomics, or the economy of medications and healthcare systems, is something we rarely pause to think about unless we are directly affected financially. This is typically when we seek medical attention and the need to fill our scripts on a regular basis arises. This is particularly true for those who have complex medical conditions, or a multitude of health problems that require pharmacological interventions. Even though these situations can cause the biggest hardship, we can all benefit from knowing how to stretch your dollar even further.

Our healthcare is changing over time, and we are playing catch-up. The Australian Institute of Health and Welfare (AIHW) say that the main changes are:

  • There is a greater demand for mental health services
  • Palliative care services continue to grow
  • The number of people who work in healthcare is growing, and their average age is increasing
  • There is a greater demand for assisted reproduction services

No single factor is responsible for the continuous changes in our system; our healthcare and medication needs will continue to evolve as the needs of all Australians change.

Sources of health funding 2009-10
Australian Government 43.6%
State/Territory/local Government 26.3%
Individuals 17.5%
Health Insurance Funds 7.6%
Other 5.0%

Source: AIWH

The real cost of medications

Drugs are big business, and we’re not referring to the illicit kind. Overall spending on health, according to the AIHW, reached $121.4 billion in the 2009-10 financial year, (the most recently released data) accounting for 9.4% of gross domestic product (GDP). This worked out to be around $5.5k per Australian, which is in line with the OECD average. Pharmaceutical spending accounted for 14% of this spending, at $17 billion. Let’s see how we are tracking over time:

Total expenditure on health as a % of gross domestic product
2000 2002 2004 2006 2008 2010
8.0 8.4 8.5 8.5 8.7 9.4

Considering we’re spending more on health now than we were a decade ago, it’s interesting to see medications travel in the opposite direction. As of 2015, the maximum patient contribution for a medication is $37.70 for the general populace and $6.10 for concession card holders.

Total expenditure on pharmaceuticals as a % of total expenditure on health
2000 2002 2004 2006 2008 2010
14.8 14.5 14.8 14.3 14.6 14.0

Generic medications

Generic medications are simply replicas of existing medications that no longer have an active patent to protect them from competition. More often than not, the generic versions are cheaper because the manufacturers have not put in the research and development costs of the original drug-makers. The generic drug must have the same benefits and safety profile of the original.

  • Always keep your Medicare card on you. This ensures that you pay costs in line with the Pharmaceutical Benefits Scheme – the government assistance for the cost of medicines.

You can ask your doctor whether a drug is appropriate for you if you have certain allergies or intolerances (there are small variations in coatings and fillings, even though the active ingredients are the same), and be sure to check with your pharmacist to see if they offer a generic version of the drug (which can be cheaper to purchase).

If the medication is still under patent, or no generic exists, it’s worth having a discussion with your doctor about whether an alternative medication may be just as efficacious. Sometimes the way a drug works is very specific, and there might be a very good reason you have been prescribed a certain medication rather than a similar drug.

The Therapeutic Goods Administration are a government department responsible for regulating therapeutic goods, such as prescription medicine, vaccines, sunscreen, and vitamins. So how to we know they are effectively monitoring generic drugs?

  • They examine the consistency and quality of the manufacturing process
  • They look at the quality and combination of the ingredients in the final product
  • They obtain the clinical trial, research and safety studies of the original drug

Over the counter medications

These are drugs and supplements that do not require a script from a doctor. Sometimes they work as well as prescription medication, especially for temporary or non-serious conditions like hayfever, sinus blockages, sore throats and digestive issues. It’s worth having a chat to your pharmacist about what might be effective for you, but always ensure you follow the instructions on the packet carefully because over-the-counter does not mean harmless. Even paracetamol, found in the homes of families all over the country, can result in serious harm if it’s misused.

The other benefit of buying over-the-counter is that you often have several comparable products to choose from and can make a decision based on cost. If you’re unsure what the differences are between various brands, or you need to know if an ingredient is compatible with your current state of health or any other medications you’re on, ask your pharmacist for assistance. Their knowledge can be invaluable, and if there’s any doubt, they can seek an answer for you. If you remain on over-the-counter medications for more than a few days, it’s worth telling your doctor – further investigations may be recommended.

  • On average, 742,000 medicines are dispensed by community pharmacies

Bulk buying

We know that buying more usually costs less per single unit, but you may not have thought this could apply to medications as well. This can work in a few different ways.

  • First, consider the strength of your medication compared with the strength you need. Can you get a higher dose and simply split the tablet or capsule? If you take two tablets, is it possible to condense this to one with a stronger dose? These questions are worth asking before you fill your next script.

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  • Second, think of the over-the-counter medications you regularly by, like ibuprofen, throat lozenges or paracetamol. The active ingredient is consistent across brands, so it’s worth waiting for a sale (flick through the weekly catalogues and keep an eye out), and then buying in bulk. You may have a year’s worth tucked away, but the savings can be worth it. Just check the expiry dates before consumption if you have bought in bulk.
  • Third, have your medications reviewed by your doctor from time to time, particularly if you are on several of them. There may be a good reason to take one or more off the list, or a change in lifestyle may have improved certain conditions to the point where medication is no longer necessary.
  • The final trick, and the one least known, is that you may be able to fill multiple repeats of a script at once and save substantially. This is known as a Regulation 24, and allows pharmacists to supply a PBS scheduled medication and all of the prescribed repeats at once. There are two stipulations here – one being that the prescription must be endorsed as a “Regulation 24” by the prescribing physician, and the second one being that optometrist prescriptions cannot apply this regulation. Keep in mind that medications must always be dispensed safely and responsibly, so if your doctor cannot endorse a Regulation 24, ask why it is not appropriate to do so.

Where else can you cut down?

The first and easiest answer here is to compare multiple pharmacies in your area. You’re likely to find medications with the smallest profit margins in the bigger chains, but you may compromise on service because of the sheer number of customers flowing through. A local, trusted pharmacist may be worth the higher cost of medications to you, but even the smaller pharmacies may offer customer incentives, such as membership discounts.

The other way to reduce your costs is to look at what non-essential items you are buying. Supplements, for example, can be extremely expensive and the benefits are often overstated. If you have a medically-diagnosed deficiency, such as vitamin D or iron, ask your doctor what dosage you need and follow up with blood tests after a recommended period of time to ensure you’re back on track. Nutritional deficiencies are generally rare in Australia outside of certain sub-populations (vegans and Indigenous peoples, for example), so a general multi-vitamin might not provide you with any health benefit if your diet is sufficient.

Pregnancy vitamins, as guided by a physician, are always advised, but there are many products on the pharmacy shelves that are not going to contribute to your overall health. The message that doctors and other health professionals are always trying to get out is that increasing your intake of fresh fruit and vegetables, accompanied by sufficient quantities of protein, fatty acids and dietary fibre, will be the cheapest and most reliable way to optimal health. If you read an article or have a friend recommend a supplement, have a chat with your doctor or pharmacist to figure out if it’s money well spent.

Safety nets and concessions

The Medicare safety net, as overseen by the PBS, allows consumers access to further subsidised or even free medications and services once a certain threshold is met within a calendar year. This threshold is subject to change from budget to budget, so it’s worth keeping up with current policy. The safety net kicks in once a person spends over a set amount on prescription medications in a calendar year (as opposed to a financial year)

So. what happens then? If you pay the standard rate on your medications, you will convert to the concessional rate (the rate paid by concession card holders) for the remainder of the calendar year. If you already pay the concessional rate, your prescription medications will be free for the same period. Those eligible for concession rates include holders of the following cards:

  • Commonwealth Seniors Health Card
  • Health Care Card
  • Low Income Health Care Card
  • Pensioner Concession Card
  • Department of Veterans’ Affairs Card
  • Foster Child Health Care Card
  • Ex-Carer Allowance (Child) Health Care Card
  • Medicare Card (general PBS concession)

In addition to this the advantages may extend to other forms of health care that are subject to a Medicare rebate, including, but not necessarily limited to:

  • Professional consultations
  • Pathology
  • X-rays, ultrasounds and CT scans
  • Psychiatric and psychological services
  • Radiotherapy
  • Tissue Biopsies

Budget for your health

It can be difficult to know what your health costs are over a given period of time, particularly when large invoices get separated from small receipts and suddenly the paperwork is more hassle than it’s worth. There are a couple of tools that may assist, though. One is to contact your private health insurance company and request a list of your rebates and out-of-pocket expenses on your claims. This is particularly helpful for services that aren’t covered by Medicare, such as dental and physio.

Related: 5 stats that will make you want dental cover now

The other way to track your expenses is to sign up to myGov. This is a secure, free government-hosted website that allows you to create a tailored membership that links out to helpful organisations such as the Australian Tax Office, Centrelink, the eHealth system, Child Support, the NDIS, and Medicare. You can link your account to all or none of these services.

To link to Medicare, have your Medicare card and the details of your last medical appointments handy (for identity verification purposes). Suddenly you will have remarkably detailed breakdowns of your expenditure in a given period, including the full costs and out-of-pocket expenses. You can even make claims online by uploading images of your invoice! Suddenly you have a whole new budgeting tool, and along with your host of new tips, your healthcare costs can become less of a burden on your time and your wallet.

Access to necessary medicine is not restricted by wealth

Ultimately, the cost of a specific prescription medication may be out of your control, but it’s often worth asking your physician if there are any alternatives. If buying over the counter, generic brands and buying in bulk can offer worthwhile savings. Because of the public system in Australia, you should never be without necessary treatment because you cannot afford to pay. If you are struggling, it could be a good idea to speak with your health professionals, or your health insurer, to see if there is anything that can be done.

Author comparethemarket.com.au

Launched in September of 2012, Comparethemarket.com.au – operated by Compare the Market Pty Ltd (CTM) – has teamed up with a range of Australia’s insurance providers so you can compare some of the latest deals, in one place, side-by-side. The team behind comparethemarket.com.au have experience in insurance, comparison, customer service and digital. If this was a stuffy corporate monologue, we’d tell you that we’re a bunch of subject matter experts specialising in User Experience, Customer Insights & Online Strategies. But to be honest, it’s just as accurate (and a whole lot easier) to say that we’re a bunch of people who want to make your experience with online comparison better. We pride ourselves on the fact that we’re forward-thinking, that we share an entrepreneurial spirit, and the fact that we like to have a bit of a laugh too. We’re all a bit too addicted to chocolate, but no one’s perfect, really.

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