Drug prices increase as inflation rate declines

You may want to be extra vigilant buying brand-name prescription drugs these days. Prices for some of the most widely prescribed brands shot up an average 9% this year–the highest rate in over a decade–even as the overall inflation rate actually declined by around 1 percent.

This assessment* comes from Stephen W. Scholdelmeyer, a professor of pharmaceutical economics at the University of Minnesota’s PRIME Institute. The analysis includes drugs such as Nexium for heartburn (up 7.2%), Plavix to prevent blood clots (up 8.2%), Singulair for asthma (up 12.5%), Flomax for enlarged prostate (up 19.7%), and Fosamax and Boniva for osteoporosis (up 6.9% and 18.6%, respectively).

The analysis was done for AARP, which has closely monitored wholesale prices for a group of 219 drugs since 2002. "The pharmaceutical industry should be embarrassed when it sees its own price increases put side-by-side with the general inflation rate," said John Rother, AARP executive Vice President. "Even as the cost of most good and services drops, a person taking just one brand name drug now pays $200 more per year than a year ago."

Buzzword: The Hatch-Waxman Act

What does it mean? The Hatch-Waxman Act (formally known as The Drug Price Competition and Patent Term Restoration Act) first passed 25 years ago in 1984 helped make inexpensive generic drugs available to consumers. This law streamlined the process by which generic drug manufacturers could apply for Food and Drug Administration approval of their drugs once the patent on a brand-name medicine expired. Under this law, generic manufacturers can forego expensive clinical trials and instead gain FDA approval based on less costly studies that show their drugs are equivalent to brand-name medicines. This cut the expense of bringing a generic drug to market, which lowered the cost of these medicines for consumers. Generic drugs now comprise more than 60 percent of prescriptions filled—up from 19 percent in 1984, when this law was first enacted. (Learn 10 more ways to cut your drug costs.)

Why the buzz? Now 25-years old, the Hatch-Waxman Act has helped consumers save money even while health-care costs have generally soared. The Act provides generics that are just as safe and effective as brand-name drugs, but at a far lower price—often prices up to 70 percent or less of the brand-names. However, this law has also been used by brand-name drug makers to block generic drugs from becoming available to consumers. Brand-name drug makers have used provisions of the Hatch-Waxman Act to extend their patent that delay generic drugs from entering the market. In addition, brand-name drug makers have made deals with generic manufacturers where the generic firm keeps its drug off the market in exchange for payments from the brand-name firm. Both drug manufacturers benefit from these arrangements, but consumers lose out. (See best drugs for less for related information.)

Another emerging issue that is currently being debated in Congress is that the Hatch-Waxman Act does not provide for an FDA approval process for generic versions of biologics. These branded medicines are important therapies that are used to treat certain cancers, multiple sclerosis and other serious diseases but they can cost more than $100,000. The availability of generic biologics could dramatically reduce prices and save consumers significant amounts of money. Congress is currently considering legislation that would pave the way for FDA approval of generic biologics, or biosimilars, but so far, the issue remains unresolved.

Five ways to cut your grocery costs this weekend

I'm usually quite organized and frugal with my shopping. I don't buy more than needed and love making frittata or pasta dinners from leftovers. But this summer, I've fallen out of that routine and need to re-calibrate my shopping and cooking habits to save some money and get into a groove before school starts. So in an attempt to get back to basics, I checked out our Shop Smart sister site, and found these five tips to help us with the weekend grocery shop:

1. Make your own salad dressing instead of bottled
Seems obvious, but it hasn't stopped me from collecting five bottles of various Caesar dressings over time that I don't even like--they're all too sweet and creamy. Making my own would've saved a bundle--and tasted better to boot.

2. Buy heads of lettuce rather than pre-washed, bagged greens
I usually justify buying bagged by saying it helps me eat more greens. But in fact I end up throwing out more because it doesn't last well for me. Buying head lettuce tastes fresher and is a huge cost savings too. And it's not really that time consuming to wash and chop up, is it?

3. Same goes for carrots
I use the same reasoning when buying bagged carrots as I do with lettuce. But buying a big bunch of whole carrots, then washing and chopping isn't hard, really. And my family can still have the same convenience as the ready-to-eat baby carrots we usually buy without the expense and the occasional ick-factor of slimy preservatives. 

4. Try a hunk of Parmigiano instead of grated
I had some friends from Italy over last night for dinner and was embarrassed about the grated tub on the table. No, not for snobby reasons, but because I realized how much better freshly grated cheese tastes--and it costs about $1 per pound less too.

5. Buy in bulk wisely
Buy in bulk only those items you frequently use. For me, that's potatoes and onions--stapes I use in soups, casseroles, and quick mid-week dinners. At one local store, a 5-pound sack of potatoes was $2.99, while the same variety loose was 99 cents a pound. Likewise, don't buy perishables in bulk if you really don't use them.

What frugal shopping tips do you have? We'd love to hear them!

--Trisha Brandon, online editor

The myth that will not die: Health care for immigrants

You can depend on it. Whenever we write an article or a blog about the woes of the U.S. health care system, at least one person writes back to complain about how illegal immigrants get free health care.

Some recent examples:

One of the biggest costs in Healthcare is not even mentioned in Obama's plan.....Illegal Aliens get free healthcare!!

It just boggles my mind that we take care of ILLEGALS and their families and the unemployed but offer no assistance to a hard-working, tax-paying AMERICAN CITIZEN.

And an anti-reform chain email that’s circulating in various versions on the Internet ups the ante by claiming that the House health care bill* says that "HC will be provided to all non-US citizens, illegal or otherwise, will be provided with health care services."

To get this latter assertion out of the way first, it’s a fiction. The bill specifically says that that undocumented aliens aren’t eligible for subsidized health insurance. See for yourself:

It’s unclear where the larger urban myth of "free health care for illegals" originated, but it’s not true either.

Death by bad health care

As we noted previously, comparing different countries’ health care systems is tough because of the many variables involved, such as the fact that the U.S. has both the highest rate of overweight and obesity and the lowest smoking rate of the eight industrialized countries we’ve been looking at. And let’s not even get into matters like diet: how to compare Japanese who live on rice, fish, and vegetables to the wine-and-cheese-loving French to the fast-food-eating Americans?

Enter the concept of "amenable mortality." Invented years ago in the United States and used worldwide by researchers ever since, it’s basically a body count of people who die for want of "timely and effective health care." A higher rate is bad, because it means the country’s health care system is falling down on its one and only job, which is to keep people healthy and do the best job possible of treating them if they get sick.

Examples of the types of deaths we’re talking about:

• Adults who die from breast or colon cancer before age 75, indicating lack of timely mammograms or colon screens or care.
• Children who die before age 14 from vaccine-preventable or easily treatable illnesses such as coughs, measles, asthma, and other respiratory problems.
• Diabetics who die before age 50 from complications that could easily have been prevented with proper medical management.
• People who die from infections or hypertension before age 75, a symptom of lack of preventative and appropriate care, including blood pressure control.

Back in the mid-1990s, two British researchers measured amenable mortality in 19 industrialized countries. At the time, the U.S. ranked 15th out of the 19 (above*).

Are Americans healthier than other nations?

We spend more per capita, both in total and in tax dollars, on health care than other major industrialized countries, according to the latest figures from the Organization for Economic Cooperation and Development. But all that extra money doesn’t buy us extra-large helpings of doctor or hospital care.

(If you want to dig into the OECD data yourself, you can download it here.)

The goal of health care, of course, is better health. Does our huge monetary outlay at least buy us this? That’s a trickier question to answer than you might think, but let’s take a stab at it.*

Start with the most basic comparisons, such as infant mortality. Among the eight wealthy, industrialized countries in our comparison group, ours is the highest (that’s bad).

Our life expectancy at birth, on the other hand, is the lowest (also bad).

What are we getting for the big bucks? More MRIs

As we saw in our previous blog, the U.S. not only spends way more per capita than other rich industrialized countries on health care overall, but also pays more tax dollars for health care, person for person, than they do.

Just what are we getting for these big bucks? Because it certainly isn’t health care for everyone.

To hear some opponents of reform tell it, inhabitants of these other countries are dropping like flies from lack of health care, while we enjoy a superabundance of it. But the latest data from the Organisation for Economic Co-operation and Development tell another story.

Let’s start with doctors. (click on images to enlarge)

Health care: Paying more, getting what?

So here's a pop quiz: Which of the following countries spends the most public money on health care? Canada, France, Germany, Japan, The Netherlands, Switzerland, United Kingdom or the United States.

The answer is the United States, which may surprise those who consider our nation to be the apotheosis of private-enterprise health care. It is true that, as a percentage of health care spending, the U.S. is more “private” than these other countries. Taxpayers pick up only 45 percent of our national health care tab, compared to 59 percent for the next-most-private system, Switzerland, or 82 percent for the most public system, the United Kingdom’s.

(All figures are for 2007 except for Japan, which is for 2006)

But health care is so hugely more expensive in the U.S. than in these other countries that our 45 percent adds up to more dollars, person for person, than their 59 percent, or even 82 percent.

Out-of-network charges: unusually high and customarily secret

More evidence emerged from a recent Senate investigation that the insurance industry has routinely underpaid for out-of-network care. The investigation by the Senate Committee on Commerce, Science and Transportation* found that health insurance companies in every region of the United States have used faulty databases from Ingenix, Inc. to underpay the insurance claims of millions of Americans. As a result, billions of dollars in bills that should have been paid by insurance companies have been shifted to consumers, the report said.

The revelations build upon those from an investigation by the attorney general of New York, which found that Ingenix, a wholly owned subsidiary of one of the largest insurance companies in the country, UnitedHealth, systematically understated market rates up to 28 percent across New York state. Further, the company’s databases were never accessible to consumers, and none of the insurers disclosed that the data used to calculate the rates was compiled by a major health insurer.

More than 100 million Americans pay extra for health insurance that allows them to go out of their network to receive care from doctors of their choice. Consumers who use such PPOs can expect their insurance company to pick up a percentage of the bill when they use out of network providers. But insurers don’t pay a portion of the whole bill—just a percentage of the portion that they deem to be "usual and customary."

Save money, don’t fall for bogus health claims

If you’re like millions of savvy food shoppers, you pay close attention to health claims on food packages before you buy. According to a Harris Interactive poll, most adults (95%) have read food labels at some point in order to learn nutritional information about a product. And of adults who read food labels, 39 percent say their most important reason for doing so is to eat a balanced, nutritious diet.

But while many food packages plug health claims in big, bold lettering such as “lower your cholesterol” and “0g trans fat,” the real nutritional value—or lack thereof—is often buried in the fine print. Our shoppers found partially hydrogenated vegetable oil on the ingredients list of a box of popcorn that claimed to contain no trans fats. The FDA allows products to be labeled as containing "0 g trans fat" if they have less than 0.5 grams per serving, which is not a lot, but it can add up, especially if you eat several servings.

Grocery aisle gotchas not only trick you into believing you’re choosing healthier options—they could be costing you more money. So don’t just read the big, glossy health claims printed on the package, check out the nutrition label and ingredients list before you buy. The ingredients are listed on food labels in order of their proportion in the food, from greatest amount to least amount. That means if you’re buying bread labeled “made with whole grain,” whole wheat should be the first ingredient, and refined white flour (aka enriched wheat flour, unbleached wheat flour, or just wheat flour) should not appear on the list at all or show up only near the end.

Say no to Flomax, save up to $3,000 a year

How much do men really need to spend to treat the symptoms of enlarged prostate? For most men, doxazosin—a generic alpha-blocker—works just as well and is as safe as the heavily-advertised drug Flomax (a brand-name alpha-blocker). But the kicker here is the difference in price: doxazosin can cost $10 or less a month, whereas Flomax can set you back up to $246.

Our new Best Buy Drugs report is based on a systematic review of more than 60 studies, and the results clearly show that no one alpha blocker is better than another at relieving enlarged prostate symptoms. This type of research, known as comparative effectiveness, is the basis for all our Consumer Reports Best Buy Drugs reports.

But why doesn’t the public know that an effective, safe and cheaper drug already exists to treat the symptoms associated with this condition? One reason is advertising. And lots of it.

Drug makers spend enormous sums of money to get their drug’s name into your living room and emblazon it on your mind. In fact, in 2007 branded drug makers spent more than $5 billion on advertising to consumers, and another $15 to $20 billion promoting their drugs to doctors.

When it comes to Flomax, what the ads won’t tell you is that another drug—actually several drugs—already exist to treat the symptoms of enlarged prostate and they work just as well.

Health Weekender: Get the best brew—then use the leftovers

I joke on a near-daily basis, “I can’t speak in full sentences until I’ve had my morning cup of coffee.” And the weekend is when coffee becomes more than functional and I have time to try out some gourmet brew. Coffee prices vary widely—and if you’re a coffee connoisseur, you’ll go far and wide and spend just about anything for the right java. But, most of us want a delicious brew, without digging too far into our wallets. Our ShopSmart editors have got some tips to help you shop:

Clip some coupons. Download coupons for the brands you know you like at manufacturers’ Web sites, such as Dunkindonuts.com.

Don’t stock up on bags. All ground coffee loses flavor fairly quickly, so don’t stockpile coffee, even if you get it on sale. It’ll be money down the drain.

Grind your own. Buying ground coffee might be easier, but you can’t beat the taste of fresh-ground beans. The trick is to buy only what you will use in a short time and to grind only what you will drink immediately. One top grinder from our recent tests, the Mr. Coffee IDS77 at right, costs just $20.

Green beans

It’s great to be environmentally friendly—but make sure you know what you’re buying into. These coffee translations will help you decide whether to spend a little extra green for green beans:

Bird friendly: These beans are organic and are grown under conditions that benefit bird habitats

Fair trade certified: Look for certification by this nonprofit, international program that advocates sustainable production and fair prices for small farmers. Among the brands of fair-trade coffee that we tested were Bucks County, Kickapoo, and Starbucks.

Hit the gym on the cheap

We all know that exercise can help control your weight, fight stress, help you get a good night’s sleep, and boost your immunity—but the recession has many of us putting our health and fitness on the back burner. A quarter of Americans polled recently by the American Heart Association said they’d cut their gym memberships within the previous six months due to economic strain.

If you’re juggling your finances and your fitness goals, here are some ways you can still hit the gym on the cheap:

Tone down the extras. We’d all like a health club with aromatherapy oils in the bathrooms and a spa massage pool, but membership fees for boutique gyms can cause sticker shock. Instead, choose a gym that offers the amenities, equipment, and classes you need, and a membership fee that fits your budget, but skip the boutique touches like fancy towels.

Jump on summer deals. Many gyms are reducing monthly rates and waiving enrollment fees just in time for summer. The YMCA health club in my neighborhood is offering a summer membership at a flat-rate of $200—and for an extra $75, you can enroll your children.

8 ways to get more sleep for less money

A good night’s sleep can cost a fortune. Sleep disorder diagnosis and sleep hygiene cost $23.7 billion in 2007, according to market research publisher, Marketdata Enterprises. That means high sales of sleeping pills, premium mattresses, high tech pillows, sleep masks, and more—and still Americans aren't getting enough sleep.

What if you could skip the pills, fancy pillows, and expensive mattresses and fall asleep by cutting out some unhealthy nighttime habits? Try these tips for getting some shut-eye before you shell out:

• Get off the couch. Regular exercise promotes healthy sleep—and weight loss, stress reduction, blood sugar management, and the list goes on. But allow at least 4 hours between exercise and going to bed as it will rev up your metabolism, making falling asleep harder.

• Step away from the computer, and the TV. It’s not easy to turn off the tech, but you need to be calm to get a good night’s sleep. Late-night TV watching and surfing the web will stimulate you.

• Pick a bed time (and a wake up time) and stick to it. Going to sleep at different times every night—10:00 p.m. one night and 1:00 a.m. the next—disrupts optimal sleep. Try to go to sleep at around the same time every night, even on the weekends. And wake up around the same time every day (with not more than an hour’s difference on the weekends).

Home test kits: 5 questions to ask before you buy

Home medical test kits can offer convenience, cost-savings, and privacy—and there seems to be no end to what they can detect: pregnancy, menopause, fertility, cholesterol levels, blood pressure, and whether you’ve had too much to drink. I even found kits that test for paternity and infidelity—move over Maury Povich. But not all kits will save you time, or money. For example, a cholesterol kit for frequent at-home testing may be unnecessary since cholesterol levels don’t change much from day to day. On the other hand, some inexpensive drugstore kits, like the ones used to detect yeast infections and pregnancy, can give you fast, accurate results without the need for follow-up lab work.

The most useful home tests are those you use to monitor chronic conditions between visits to your doctor, such as a blood pressure monitor or blood glucose meter. They can give you immediate feedback so that you can make adjustments and help prevent serious complications, among other things. But talk with your doctor before you invest in one.

But watch out, costs for home test kits vary widely. For example, ovulation kits range from around $3 to more than $50 , breathalyzer tests from $15 to $80, and cholesterol kits from $12 to $174 or more. So, before you set out to do-it-yourself, consider the following: