Compare Medicare Part D Plans and Save Big Bucks - dummies

Compare Medicare Part D Plans and Save Big Bucks

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Most folks don’t compare Part D plans before choosing one, so most of them are paying far more than they need to for their drugs. That’s because the variation in what Part D plans charge, even for the same drug, is enormous. Many analyses of Part D plans demonstrate this point very clearly.

Checking the co-pays for just one month’s supply of a single common prescription drug — using the same dosage and quantity — in all the Part D plans offered in one state very often reveals variations in co-pays of more than $100 for a 30-day supply of the identical drug and sometimes a range of around $600 a month!

Don’t believe it? Take a look at the table, which shows three drugs and the lowest and highest co-pays that were charged for them among all Part D plans in a given state in 2013. The first two meds — Abilify and Procrit — are brand-name drugs that currently have no cheaper generic alternatives.

The third drug is the relatively new generic copy of Lipitor, once the world’s best-selling medication, which commanded high prices before facing generic competition in 2012.

Notice the gigantic range in co-pays for one month’s supply of the two brand-name drugs — from $45 to $332.50 for Abilify and from $28 to $602 for Procrit! It seems too outrageous to be true. But here’s what’s happening: The plans that charge low-to-moderate amounts require you to pay fixed dollar co-pays, whereas those that charge the mega bucks require you to pay a percentage of the cost of the drug.

This percentage (technically known as coinsurance) varies a lot among plans: anywhere from 25 to 50 percent of the cost. That doesn’t matter so much when the full price of the drug — that is, the price the plan has negotiated with the manufacturers — is relatively low.

But the full price of Procrit is more than $2,007 a month, which is why the highest-cost plan in this analysis (charging 30 percent of that price) ends up with the whopping co-pay of $602. The same, on a much smaller scale, is true of generic Lipitor. But how would you know if you didn’t compare plans head-to-head according to the drugs you take?

Another lesson here: If you need expensive drugs, avoid Part D plans that charge percentages of the cost if at all possible.

Comparing Co-pays for the Same Drugs     among
Part D Plans
Drug, Dosage, and Frequency State (Number of Part D Plans) Lowest/Highest Co-pay for 30-Day Supply
Abilify, 10 mg once per day NY (24 plans) $45/$332.50
Procrit, 4,000 ml, one pkg per month FL (29 plans) $28/$602.11
Atorvastatin, 20 mg once per day CA (24 plans) $0/$14.38

Source: Centers for Medicare & Medicaid online plan finder, 2013