How to Save on Prescription Drugs

Making Sense Out of Various Options for Prescription Drugs Savings

By Mellody Hobson

Aug. 19, 2004

As the price of prescription drugs rises each year, so does the need for them by Americans who rely on statins and other modern life-saving drugs to stay alive.

In the latest installment of Good Morning America's "Show Me the Money" series, we offer tips on how Americans can save on prescription drugs, no matter where they live.

Drug Companies Offer Assistance to Consumers

Pfizer has recently launched a new initiative aimed at reducing the costs of prescription drugs for low-income families as well as senior citizens. Specifically, families earning less than $31,000 a year are eligible to receive free Pfizer medicine, while those earning up to $45,000 annually will receive drug discounts, resulting in an average savings of 37 percent on their Pfizer prescriptions. Additionally, people earning more than $45,000 a year who do not have prescription drug coverage may be eligible to receive a 15 percent discount on their Pfizer medications. Lastly, low-income seniors (65 years of age and older) earning less than $12,529 a year for an individual and $16,862 for a married couple can obtain a one-month supply of any Pfizer medicine for $15 through any Medicare-approved drug discount card. To enroll in this program, a patient must complete and submit an application that's signed by their physician, as well as a copy of their tax return and prescription information.

Legislators Working to Reduce Prescription Drug Costs

Several states are considering programs which would ease the burden of prescription drug costs on their residents, with Illinois and New York taking the lead.

Illinois Solution: Legalized Overseas Purchases

Illinois Gov. Rod Blagojevich and Rep. Rahm Emanuel, D-Ill., recently announced a plan to create a network of pharmacies that would permit Illinois residents to buy less-expensive drugs from Canada. Launching in the next month, this program would allow state residents to purchase prescription drug refills on approximately 100 common brand-name medications through a Canadian clearinghouse under contract with the state.

Individuals who want to participate in this program would need to complete a detailed health profile before mailing in their prescriptions to the clearinghouse. Alternatively, they can have their physicians fax their prescriptions to the clearinghouse directly.

An in-house doctor at the clearinghouse would then review and approve all prescriptions before submitting them to one of the 35 to 50 pharmacies expected to be included in the network.

It is anticipated that prescription orders would take approximately two weeks to fill.

New York Solution: Comparison Shopping Made Easy

The office of New York State Attorney General, Eliot Spitzer, offers a Web site ( that allows consumers to compare prices for the 25 most commonly prescribed drugs at pharmacies across the state.

The site allows you to run a search, by drug, to find the lowest available price; however, it does not allow you to purchase the drugs directly. As such, a physician would have to call or fax in the prescription directly to the specific pharmacy, which could then fill and send the prescription to the patient.

Questions About Drugs from Canada

Is it legal to buy drugs from Canada? Although U.S. law prohibits the re-importation of prescription drugs, the Food and Drug Administration (FDA) will not prosecute individuals who import small quantities of prescription drugs from Canada for their own use (limited to a three-month supply).

Is it safe to buy drugs from Canada? Similar to the United States, Canada has strict laws governing pharmacies with every pharmacist and pharmacy licensed within and by their respective province.

Drugs manufactured for the Canadian market come from the same Food and Drug Administration-approved facilities as those destined for the American market. However, if you are ordering over the Internet, you need to beware of "rogue sites" posing to be Canadian pharmacies. Sites which require customers to complete a questionnaire before ordering prescription drugs, bypassing any face-to-face interaction with a health professional, can be lethal.

In fact, there is a widely known report of a 52-year-old Illinois resident who died of a heart attack in March 1999 after buying the impotence drug Viagra from an online source that simply required a few answers to a questionnaire to qualify for the prescription.

The man reportedly had a history of heart disease. The National Association of Boards of Pharmacy (NABP) represents all state boards of U.S. pharmacies as well as eight provinces in Canada.

The NABP runs the "The Verified Internet Pharmacy Practice Sites™(VIPPS®)" program and all online sites that carry the VIPPS seal of approval are appropriately licensed and legitimately operating via the Internet. Do not shop on an online site which does not have this seal.

Will drug companies abandon products and research, making this a short-term fix with huge, lasting implications?

The answer is no. According to Marcia Angell, a senior lecturer at Harvard Medical School and the former editor in chief of the New England Journal of Medicine, the largest drug companies spent 14 percent of sales on research and development. However, they spend another 31 percent on marketing and administration, Angell said.

Therefore, room exists for research and development remains in an industry where the combined profits for the top 10 drug companies were $35.9 billion in 2002. Furthermore, the Federal Government and taxpayers contribute significantly to research and development.

According to a report by the Joint Economic Committee of Congress in 2000, the Federal Government funds about 36 percent of all U.S. medical research.

Will drug companies renegotiate their volume-discount agreements with Canada and Europe if consumers in the United States are suddenly given unlimited access?

Not only could drug companies renegotiate their volume discount agreements, they could exercise a myriad of options to avert any possible lost revenue from the sales of international drugs within the United States.

First, drug companies could simply raise prices on their patented drugs.

Additionally, foreign governments, in an effort to keep prices low and prevent other countries from importing their supply, could place a limit on drug exportation.

Finally, drug companies could differentiate their products by country (change the color, size, shape, etc…) or shift the production of their products to facilities not registered with the FDA — both disrupting their status as approved products for U.S. consumption and making it illegal to export them to the U.S.

Do generic drugs from the U.S. still cost more than Canadian drugs?

No. According to a report issued by the Food and Drug Administration said that generic drugs comprise of one-half of all prescriptions written in the U.S. Generic drugs are less expensive than Canadian-branded drugs and some Canadian generic drugs, according to the report. The ingredients in the brand name drugs are identical to their genetic counterparts.

Mellody Hobson, president of Ariel Capital Management ( in Chicago, is Good Morning America's personal finance expert. Ariel associates Matthew Yale and Aimee Daley contributed to this report.