It’s a mad, mad Medicare system: Part 3

Medicare makes me a (prescription) drug mule

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  • Contributor
  • May 26, 2011

The following is the third report from Guest Contributor Glenn Tornell, who’s investigating the “mad, mad, mad, mad Medicare system” as a prospective enrollee and then – with any luck – a beneficiary. His first report on Medicare is here. The second is over here.

A simple phone call to Canada last year saved a Minnesota woman $1,400 in prescription drug costs. That’s quite a return for a retiree on Social Security and Medicare. Sounds almost criminal.

In fact, it was. Because importing drugs into the United States from Canada or any other foreign country is illegal. Technically speaking.

It’s kind of a wishy-washy legal area. And I suppose my friend Tracy could have been subjected to waterboarding by the Food and Drug Administration, technically. But she’d have to get in line. More than a million Americans each year buy their prescription medications online through Canadian pharmacies.

Truth be told, it’s like operating under “Don’t ask. Don’t tell.” rules. The powers that be the Feds and the FDA don’t generally prosecute anyone importing medications for their personal use. Americans, in fact, are generally allowed to import up to a three-month supply with no fear of prosecution.

Go figure. Real enforcement is targeted at international drug suppliers, not consumers.

The dreaded donut hole*

medicare-donut-holeWhat turned my friend northward? Last August, Tracy hit the so-called donut hole, the gap in Medicare Part D coverage that affects an estimated 4 million Medicare beneficiaries each year, according to the National Council on Aging.

Initially, Medicare Part D covers 75 percent of your prescription drug costs after the first $310 deductible and copays until your total drug costs totals $2,830. Then you’re in the donut hole, lost in the wilderness without any help, until your out-of-pocket expenses reach $4,550. In other words, you pay retail or street prices for your drugs when you’re trapped in this strangely named pastry prison.

After that survivalist adventure, Medicare pays most of the costs of covered drugs for the remainder of the year. This phase is called catastrophic coverage.

So Tracy who suffers from COPD and a fear of going broke asked her local pharmacist what she’d have to pay retail for her two inhalers while stuck in the donut hole. Advair priced out at $240 a month and Spiriva at $224 a month. After throwing in a couple other drugs for blood pressure and assorted ailments, she figured her out-of-pocket costs for the rest of the year September through December would total $2,000.

“I was shocked,” she said. “I had no idea. So I asked my pharmacist about buying drugs from Canada and he said I should check it out.”

My brief life as a drug mule

That’s where I came in. Tracy is a friend, and I told her that my wife and I were driving up to Winnipeg for a quick fall vacation. She asked if I’d drop by a pharmacy and inquire about buying her prescription medications in Canada.

Well, my wife and I stopped at three large Winnipeg pharmacies, where we got the same old story: They could only sell drugs to Americans if they had a prescription written by a Canadian doctor.

Tracy,  undaunted and always scouting for a deal heard through the grapevine about an online pharmacy headquartered in Winnipeg.

“It was simple,” she said. “I called and they told me I could send them a prescription, written by my own doctor, and they’d send me four months supply of Advair and Spiriva. The total bill would be $613.27. A huge savings.”

She faxed them her prescription, along with a list of other drugs she was taking as part of’s medical background questionnaire. The pharmacy then had a licensed Canadian doctor review the documents before approving the transaction.

When she received her inhalers in the mail (shipped free), they were packaged differently. “So I brought them to my pharmacist to make sure they were okay. Turned out the medication was the same, except for the packaging.”

Can we really trust those Canadians?

Was she worried about safety? Nope. Drugs produced in Canada, she discovered, adhere to the same regulatory procedures as prescription drugs in the United States.

In fact, Canada maintains strict control over its pharmacies and requires each pharmacist to be licensed, according to the  ion, which certifies the 15 major online Canadian pharmacies. (You can contact them to verify the validity of an online pharmacy.)

Licensed, online pharmacies fill prescriptions only for “maintenance” medications for conditions such as diabetes, high blood pressure or high cholesterol. They don’t ship narcotics or other controlled substances.

Because the recent federal health care reform didn’t specifically address rising prescription drug prices, more Americans are expected to buy from Canadian pharmacies, said Tim Smith, general manager of the Winnipeg-based association.

The IMS Institute for Healthcare Informatics reported a 2.3 percent increase in spending on prescription medicines in the U.S. last year. It also found that total dollars spent on medications in the U.S. reached $307.4 billion or real per capita spending of $898, up $6 from 2009.

“I certainly see there will be growth,” he said. “The Canadian standard is to make sure that medication is affordable.”

And that’s why most Americans buy their drugs from online Canadian pharmacies.

What’s so cheap about Canadian drugs?

Medications from the same manufacturers with the same name brands come at prices the Canadian International Pharmacy Association says are 50 to 80 percent lower than in the United States.

Why so cheap? Strangely enough, for a lot or reasons.

For example, the Canadian government like most industrialized nations negotiates pharmaceutical prices on behalf of its citizens. (In the U.S., only the Veterans Administration and some states negotiate bulk drug purchases. Oddly enough, Medicare and Medicaid, with massive purchasing powers, don’t use their bully pulpit, to the dismay of most Americans.)

A few other reasons:

  • Canadian pharmaceutical companies have lower liability costs than U.S. drug companies. Canadians are less likely to sue healthcare providers or drug companies, and when they do sue, awards are a lot lower than in the U.S.
  • The Canadian government sets a cap or ceiling on the amount that drug companies can charge pharmacies and other distributors of drugs. This reduces the wholesale cost of medication for most organizations throughout Canada.
  • The average Canadian’s standard of living is 20 percent to 30 percent lower than the average American’s. This difference affects the price that a drug company sets for a brand name drug. Canadians can’t afford to pay as much as their American counterparts, so drug companies sell these medications for less.
  • The cost of direct-to-consumer advertising. You’d have to live in a cave not to notice the billions of dollars drug companies invest in television, magazine and newspaper ads.Only the United States and New Zealand allow drug companies to advertise their products directly to consumers. Critics say it drives people to higher-priced brand-name drugs when lower-cost generics are available. They also say the drug companies recoup their advertising expenses through higher drug prices.

“Prescription drug costs in the U.S. are among the highest in the world, which is why so many Americans seek alternative sources for their medications,” said Smith of the Canadian pharmacy association. “And what we hear over and over again is how outraged Americans are with the price of drugs. So it’s important for people to know that buying drugs online from a source you can trust is an available alternative, especially for people on fixed incomes.”

As for Tracy, she’s now a big fan of Canada. “The only donut holes I really like are the powdered sugar ones they sell at my grocery store.”

Even cheaper than Canada, eh?

Before you skip the country in your Winnebago or on the Web, you should know that if you can get the drug you need as a generic, and if that doesn’t bother you – you could save a bundle.

Here’s the thing: Generic drugs are usually cheaper in the U.S. than both brand-name and generic versions in Canada, according to the FDA. And about 75 percent of all prescription drugs sold in the U.S. last year were generic.

The other thing? Generally, Canadian online pharmacies are not cheaper than drug prices through Medicare Part D before you reach the donut hole.

* Starting this year, the prescription drug donut hole is starting to shrink, the result of the health care reform package enacted last year. Seniors began receiving rebates this year and according to experts the donut hole will become extinct by 2020.

Next in the series? How Medicare supplements bridge Medicare’s gaps and why you might want to invest in a paper shredder