Strategies for Reducing Prescription Costs

(1)

SPECIALARTICLE

Strategies

for Reducing

Prescription

Costs

Lance Chilton, MD

From the Department of Pediatrics, University of New Mexico School of Medicine, Albuquerque

Much like all components of the cost of living, the US national drug bifi has increased, although more slowly than the rest of the national health care bill-drugs in 1970 made up $8.5 billion or

12.9% of the $65.8 bfflion consumed by the health sector’; in 1976 the drug bifi was $11.1 billion or 8% of a total of $139.3 billion.2 A higher proportion of the cost of outpatient care is drug related; in the internal medicine clinic at our institution, 54% of

the cost of a visit is for prescriptions. The

corre-sponding figure for pediatric clinic is 21% (W. B. Applegate, M. B. Bennett, L. A. Chilton, et al,

unpublished data, 1980). Inasmuch as many third-party payers do not cover outpatient prescription costs, savings in this area often go directly to the patient.

The savings on the cost of prescription drugs can be effected through judicious prescribing for some patients. There are three categories of available methods to help patients save on prescriptions: one sure (taking advantage of “quantity discounts”), one controversial (generic prescribing), and one dif-ficult (prescribing nothing when nothing is needed).

In order to determine cost benefits that might accrue to the patient from generic prescribing and from seeking a quantity discount, I have surveyed Albuquerque pharmacies to determine their pricing procedures and their practices when they are given prescriptions written with the generic names of ten

drugs.

METHODS

A questionnaire (available from the author upon

Received for publication July 28, 1980; accepted Jan 28, 1981.

Reprint requests to (L.C.) Department of Pediatrics, University

of New Mexico School of Medicine, Albuquerque, NM 87131.

request) was distributed to all pharmacies in the northwest and northeast quadrants of Albuquerque. Anonymity was assured to all pharmacists, al-though a list of pharmacies completing the ques-tionnaire was recorded. Pharmacists were asked (1) whether a fee, a mark-up, or a combination method

was used to figure their prices, and what the fee and/or mark-up was for drugs costing the pharma-cist $3 and $7; (2) given ten prescriptions, all written

generically, with which product they would fill the

prescription, and at what price; and (3) for the same ten drugs, which brands were stocked (Fig 1).

The ten drugs chosen came from a computer-generated list of drugs prescribed in the University of New Mexico Pediatric Clinic, provided by our hospital pharmacy. Five antibiotics and five non-antibiotics most commonly prescribed in the pedi-atric clinic were chosen, and appropriate prescrip-tions were written for each. The antibiotics were

amoxicillin, sulfisoxazole, erythromycin, ampicillin suspensions, and nystatin ointment. The other drugs were hydrocortisone cream, long-acting the-ophylline tablets, diphenhydramine elixir,

pseudoe-phedrine syrup, and acetaminophen elixir.

Statistical evaluation of the results was carried out using

x2,

analysis of variance, and standard F tests when appropriate.

RESULTS

Of 55 questionnaires distributed, 41 were corn-pleted and returned, with an additional two

re-turned incomplete because the pharmacy con-cerned was a branch of another pharmacy that had filled out the questionnaire. The breakdown of

(2)

All prescriptions were written generically. Of pre-scriptions for the seven drugs in the study that are available generically (sulfisoxazole, nystatin, and long-acting theophylline were not available in ge-neric form at the time of the study), only 11.5% (32 of 287) would have been filled with a generic prod-uct (defined as a product sold under the generic name of the product) by the respondents. Only for hydrocortisone cream could a difference be shown between the price of prescriptions filled with brand name and those filled with generic products (Fig 2), but the small numbers of other prescriptions filled

generically made the chance of demonstrating a

difference low.

Of the respondents, 51% of pharmacies use a fee method, a fixed sum added to the pharmacist’s cost,

of calculating prices, and 20% use a mark-up method, in which a percentage of the pharmacist’s cost is added to that cost; 7% use fee plus markup,

and the remainder use a complex pricing scheme depending on an array of pricing decisions. The mean fee for a $3 drug is $2.87 with a narrow range

(SD = $0.38). The mean markup for a $3 drug is

46% with a wider range (SD = 26%). The mean fee rises to $3.22 and the mean mark-up decreases to

38% for a drug with a cost of $7. Pricing method does not significantly influence price to the patient of the total list of drugs.

For individual drugs, prices varied widely, with

large ranges and standard deviations (Table). On visual inspection of the data, there were several

pharmacies that could be picked out as usually high priced or usually low in price, but for most, assign-ment to these categories could not be made. I asked

if the consumer could determine the overall expen-siveness of a given pharmacy by asking its price for a single drug, by plotting correlations of each single drug against the total price for all other drugs. Most

correlation coefficients were low: the highest was for erythromycin, whose correlation coefficient with the total drug bill was 0.82 (P < .0001); diphenhy-dramine also correlated well (r = .69, p < .0001) with the total bill. Because pharmacies were not identified as to type on the questionnaire, it is not possible to state whether community pharmacies, local chains, or large chains differ in price.

DISCUSSION

In order to help their patients effectively econo-mize on prescription costs, physicians must

recog-rnze some of the factors that determine the prices

of the drugs they prescribe. “Quantity discounting” is one aspect of drug pricing that should be

appre-l0.00 9.00 800 7.00 -0

00-__&_ Mean $5.54

500 - Medn $5.25

4.00-

:

0

---Meon $358

Medion$336-4-

3.00-aoo

-.00

-Fig 1. Example of questionnaire item.

- Generic Brand

Products Names

Fig 2. Indicated prices for hydrocortisone 1% cream

prescriptions (30 gm) at Albuquerque pharmacies filling

the prescription with generic or brand-name products.

714 REDUCING PRESCRIPTION COSTS

1. Rx AmoxLt11Ln su;p. 125 mg/5m1

Disp. 1OmI

Sig. I tsp. tid x 10

Brand r

manuficturer

Tctal price

Which of the following do

you have in stock in your store? (Please check those you stock.) 0 Amoxil 0 Larotid 0 Polymox 0 Robamox 0

TABLE. Drug Prices Among 41 Pharmacies

Drug Mean ($) Median ($) SD ($) Range ($)

Amoxicillin suspension (125 mg/5 ml), 150 ml 5.61 5.50 0.88 3.99-8.39 Sulfisoxazole suspension (500 mg/5 ml), 200 ml 6.23 6.34 0.97 3.90-8.75 Erythromycin suspension (200 mg/nil), 150 ml 8.94 8.94 1.27 6.01-11.85

Ampicillin suspension 250 mg/5 ml, 200 ml 5.85 5.75 1.13 3.54-8.95

Nystatin cream (15 gm) 5.24 5.42 0.91 3.04-7.49

Hydrocortisone 1% cream (30 gm) 4.96 5.00 1.55 2.49-9.75

Theophylline long-acting (30 100-mg tablets) 4.57 4.46 0.86 2.99-5.03

Diphenhydramine elixir (120 ml) 3.57 3.77 0.99 1.50-5.95

Pseudoephedrine syrup (120 ml) 2.15 1.95 0.66 1.34-3.95

Acetaminophen elixir (120 ml) 2.78 2.69 0.68 1.99-4.70

at Viet Nam:AAP Sponsored on September 7, 2020 www.aappublications.org/news

(3)

ciated. Prescribing a larger amount of a drug once, rather than a smaller amount on multiple occasions, would result in savings.

There are several other ways to take advantage of quantity discounting. Many drugs are available in several container sizes; the largest is almost al-ways the least expensive per gram or milliliter. For example, the Blue Book3 price for triamcinolone bought in 60-gm tubes is $10.78 per 100 gm; bought in 5.25-lb jars it is $3.31 per 100 gm. In this example, the use of tables4 to predict a patient’s weekly need will help in prescribing an appropriate quantity.

Prescription of drugs in more concentrated forms (e.g., 250 mg/5 ml rather than 125 mg/5 ml) saves money for the patient; pills or tablets, when they can be taken, are almost always less expensive than liquid preparations.

The question of prescribing by generic name arouses heated debate whenever it is raised.56 Some claim that large amounts can be saved, others that generic prescribing exposes the patient to risk from varying bioavailabiity. Studies on savings from ge-neric prescribing78 have usually shown that at least

modest savings can be appreciated. However, based on studies showing bioinequivalence, such as that regarding digoxin,9 Shirkey’#{176} recommends that a physician find a brand that works for him and then continue to use it. Koch-Weser” lists the small number of drugs for which bioinequivalence has

been demonstrated. Thus, a cost-conscious practi-tioner might prescribe drugs with a narrow thera-peutic index (such as digoxin, theophyffine, or quin-idine) by a known brand name, and those with a

broader range (such as ampicillin, aspirin, chior-pheniramine, guaifenesin) as generic names. The savings can occasionally be substantial.

The study reported here did not provide a suffi-cient number of prescriptions filled with generic products to adequately test the hypothesis that prescribing generically will engender savings, as, in this community only a minority of generically writ-ten prescriptions are filled with generic products.

Several of these drugs, as well as many others, are available to the patient without prescription. A number of the responding pharmacists pointed out the increase in price dictated by having used a prescription where none was needed. Pharmacies tend to pass record-keeping costs on to the patient.

Perhaps the most significant drug-savings method available, but one not addressed in this study, would be that of restricting use of unneces-sary drugs for relief of symptoms. Marsh’2 showed that by changing a practice’s prescription policies toward rarely providing minor symptomatic drugs, $4,800 was saved in this practice alone in one month; the calculated savings for that month would

have been $19,195,000 for all of the United King-dom.

It is clear from this study that choice of pharmacy

strongly affects the cost of drugs prescribed. A physician might suggest to the patient, especially one on a long-term or expensive medication, that he or she seek the best price for that drug, inasmuch as there is surprising variation from one pharmacy to another. It is possible to determine the overall

expensiveness of a given pharmacy by asking the price of one or a few drugs (in this study erythro-mycin or diphenhydramine would be best). It is not possible to categorize pharmacies as expensive or inexpensive based on pricing method. A physician

using certain pharmacies might request that the pharmacy stock frequently prescribed generic drugs.

This article has discussed several methods by which a patient’s drug bill can be minimized. Con-sideration of amount and form prescribed can often result in large savings. Generic prescribing may result in decreased cost, but only if generically written prescriptions are filled with non-brand

name drugs. Judicious use of drugs for symptomatic relief will clearly lead to reduced costs. Selection of pharmacy may be of utmost importance as prices range widely from one to another, but the tempts-tion to assume that the pharmacy with the lowest prices is best should be resisted.

ACKNOWLEDGMENTS

The author acknowledges the statistical consultation of Dr Betty Skipper and Dr Lambert Koopmans. Form and manuscript preparation were performed by Linden Cross, Norma Mitchell, Aggie McDermott, and Julie Machell. Dr William Troutman offered many useful sug-gestions in reviewing the manuscript. The cooperation of the pharmacists in filling out the long questionnaire is appreciated.

REFERENCES

1. Medical Care Costs and Prices, DHEW 72-11908, US Dept

of Health, Education and Welfare (Social Security Admin-istration), 1972, p 59

2. Health United States 1976-77 Chartbook, publication No.

HRA-77-1233, US Depart of Health, Education and Welfare,

1977, p 2

3. American Druggist Blue Book, 1979 ed. New York, The

Hearst Corp, 1979

4. Schlagel CA, Sanborn EC: The weights of topical

prepara-tions required for total and partial body inunction. J Invest Dermatol 42:253, 1964

5. Huskisson EC: Trade names or approved names. Report of

a symposium held at St. Bartholomew’s Hospital on Sept

18, 1973. Postgrad Med J 50:61, 1974

6. Sharpe TR: Economic issues in the anti-substitution contro-versy. Am J Pharm 149:53, 1977

7. Gumbhir AK, Rodowskas CA Jr: Consumer price

differen-tinis between generic and brand name prescriptions. Am J

(4)

716 REDUCING PRESCRIPTION COSTS

8. Azarnoff DL, Hunninglake DN, Wartman J: Prescription tured drugs: Generic-therapeutic equivalence. J Pediatr 76:

writing by generic name and drug cost. J Chronic Dis 19: 774, 1970

1253, 1966 11. Koch-Weser J: Bioavailability ofdrugs (second oftwo parts).

9. Lindenbaum J, Mellow MH, Blackstone MO, et al: Variation N Engi J Med 291:503, 1974.

in biologic availability of digoxin from four preparations. N 12. Marsh GN: “Curing” minor illness in general practice. Lan.

EnglJMed285:1344, 1971 cet2:1277, 1977

10. Shirkey HC: Therapeutic reliability of variously

manufac-OUR FIRST JOURNAL DEVOTED EXCLUSIVELY TO PEDIATRICS (1884)

By the 1880s American articles pertaining to diseases of children had become

so numerous and so scattered through the medical literature that a group of five rather young New York physicians, whose practices leaned heavily toward pediatrics, became convinced of the need for a special American journal devoted exclusively to pediatric topics. In 1883 a publisher was found and in January

1884 the Archives of Pediatrics made its debut with Wffliam Perry Watson

(1854-1925) as the editor. (Figure shows title page.) The Archives of Pediatrics

continued until September 1962, when it merged with the American

Practi-tioner and the Quarterly Review of Pediatrics to appear under the new name

of Clinical Pediatrics.

THE

OF PEDIATRICS

. . AXOWTBL JorL’cALDE-oTED TOTHE

DISL&8 OF q.icrrs A1’D CILDBEN.

PT

WilLIAM PERRY WA1SO, LL. M.D.

Aat tAi Chair ( DiM.w .fCMJdr.i i* th. X.w T.rk IWyclMk

aaT PT

Aad P. PVTII. X.D., JoM Vw Vont. Jr. M.D., L E Esh, M.D., ..d

. WftCa3LD.

VOLUME L

January to December, 1884

PHUADELPHIA, . JOHN L PO1rER & cOMPANY.

617 8a.soM STREET.

The first paper published in the first issue was on convulsions in children.

The paper was filled with practical hints about how the young physician should evoke order from chaos when he made a house call to see a convulsing child. The secret was to keep everyone busy in preparing a warm bath, moving the

patient to a larger bedroom, removing his clothing, wrapping him in a flannel blanket, and looking for mustard to put in the hot bathwater. By the time all these had been done the convulsion would probably have abated.

Noted by T.E.C., Jr, MD

(5)

1981;68;713

Pediatrics

Lance Chilton