• Jane Hamlin purchases medications in Canada and saves 91%!
• At least 56 million Americans do not have prescription drug coverage
• H igh medication cost - seniors loose savings, home, land in hospital
• R easons for lower Canadian cost

BENNINGTON - A group of Bennington area physicians has found a way to help patients in need save as much as 90 percent on the cost of their prescription medications.

A loophole in federal regulations allows American doctors to legally import drugs from Canada, where prescription drugs are available at substantial savings. The case of Jane Hamlin, a 70- year-old breast cancer survivor, demonstrates the dramatic economic impact of the effort. To keep cancer at bay, Hamlin of North Adams, Mass. must take daily doses of Tamoxifen, a cancer suppressant. In the United States, a year's supply of the drug costs her $1,431. With the help of her Bennington doctor Eric Seyferth, Hamlin purchased a year's supply from Canada for $125.

Hamlin, who is retired and doesn't have a pension, said she didn't have the money to spend in the first place. For nine years, Jane's live-in sister Mary bought the vital drugs for Jane with money from her own pension. Without Mary's help, Jane would have to dip into her life's savings, or wouldn't be able to take the drugs at all. "I don't see why the U.S. can't do better by us," said Hamlin, after she realized the difference in drug prices between Canada and the U.S. Hamlin heard about the process from a friend, and when she mentioned it to Dr. Seyferth, he agreed to help. Like Hamlin, at least 56 million Americans do not have prescription drug coverage, according to data compiled from the Kaiser Family Foundation website, a non-profit health foundation. Americans without drug benefits are often uninsured or on Medicare, which serves senior citizens. “When patients can't afford their medications, seniors may deplete their savings, sell their homes, or skimp on food. Patients who skimp on dosages or stop taking their medication end up in the emergency room”.

The drugs are cheaper in Canada because that country's system of socialized medicine tightly controls pharmaceutical costs. U.S. drug prices also are higher because of costly advertising campaigns, government lobbying and research and development expenses. Another factor is the favorable exchange rate for U.S. dollars in Canada that makes items less expensive there. Same Drugs, Same Packaging. Drugs purchased by U.S. citizens in Canada generally are manufactured in the same plants in Puerto Rico as drugs sold in this country. Often the packaging is identical.

• Reason for lower cost in Canada - socialized medicine, US high cost of R & D
• Woman saves 89% on Canadian drugs

The Canadian cross-border trade in pharmaceuticals continues to expand with the opening of a Web site for doctors willing to act as go-betweens for their elderly patients. That helps increase the pressure on the drug industry as well as Congress to address the problem of high costs.

Some older Americans have for years headed across the United States' northern border to buy the medicines they need but can't afford. Drug prices there can be half or a quarter of prices in the United States.

Canadian drug prices are so much lower because the country's system of socialized medicine keeps a tight hold on pharmaceutical costs. In addition, U.S. drug prices are high because companies add the cost of research and development as well as the price of lobbying and expensive advertising campaigns.

Senior citizens, many of whom are on fixed incomes and use more drugs than other Americans, feel the pinch. Horror stories abound: A Vermont woman who paid $95 a month for the tamoxifen that kept breast cancer at bay now goes to Canada, where the drug costs her $125 a year. An older couple who were paying thousands of dollars a year for medicines were able to cut that expenditure in half by a regular northward journey.

• Employers’ increased health care costs opens the door for health plans.
• Services on which employees are spending their own money.
• Opportunity for small businesses.

Employees Want Group Purchasing Power, Information on Providers Including Credentials and Prices on Out-of-Pocket Services. KENNEBUNK, Maine--(BUSINESS WIRE)--April 17, 2002--
Nearly half of the employees (47%) participating in Digital Research Inc.'s (DRI) study of the ways in which employees are planning to cope with health care cost increases indicated that their current health plans do not meet all of their current medical needs, forcing many to pay for them at their own expense.

The findings of the study, which was sponsored by HealthAllies, a leading consumer-driven health care company, and released today at the National Managed Health Care Congress (NMHCC) in Baltimore, indicate that employees are realistic about increasing costs and the expectation that they will end up paying a rising share of these costs. Recognizing this, employees expect their employers and health plans to leverage their buying power and negotiate preferred pricing for services that employees consume.

``The opportunity for health plans is that members appear ready to reward the health plan, and by extension the employer, who helps them cope with the health care costs that aren't covered,'' states Andy Slavitt, CEO of HealthAllies.

Consistent with a recent Aon Consulting study reporting that 59 percent of employers are planning on increasing employee benefit costs or further reducing benefits as part of an effort to address continued double-digit health care cost increases, employees are beginning to recognize that they need help paying their larger share. Recent health care trends and surveys released by a number of leading benefit consulting firms project employees could be responsible for paying an additional $600 to $1,000 of their annual health care expenses over the next five years. ``The study's findings show that the vast majority of employees are looking at their health plans to play a role in helping them deal with the health care cost crisis -- but in new ways,'' said DRI Research Director Bob Cuzner.

Among the more interesting findings: --

• Only 53 percent of employees say that their health plan meets all of their health care needs.
• 41 percent of employees are spending over $500 per year on services not covered by their health plan today.
• 85 percent of employees think that their health plan/employer should offer pre-negotiated savings on services that are not being covered.
• 86 percent of employees would choose a health plan that offered pre-negotiated savings on uncovered services over one that didn't.
• 75 percent of employees would be willing to pay $3/month more for a plan that offered access to pre-negotiated savings on uncovered services.

When accessing uncovered services: -- 88 percent of employees would like to know the background of providers and 94 percent would like to know in advance how much providers charge for those services. The study also examined how these views differed according to the age and the gender of the workforce, indicating that while all ages were in agreement, these expectations were stronger among younger employees.

Areas of Medical Spending - The study also examined which health care services employees are spending their money on now that they are looking for pre-negotiated savings, provider information, and advanced pricing information. Employees indicated that glasses (52%), dentistry (47%), eye exams (42%), and uncovered prescription drugs (29%) were the most prominent. Other services which a meaningful portion of the population would like assistance with are Orthodontics (13%), Cosmetic Dentistry (13%), Massages (12%), Weight Loss (12%), MRI's and CT's (12%), Chiropractic Treatment (11%), Physical Therapy (8%), and Smoking Cessation Programs (5%). For some services, such as Infertility Treatments, LASIK surgery, and Hearing Aids, a smaller portion of the population (3% each) indicated that they were spending a significant amount of money out-of-pocket that they would like assistance on. (Note: A PowerPoint presentation on this study will be available in INSURANCE-LETTER as part of next Wednesday's white paper section.)

Offering an ancillary card to employers is going to grow in interest. There are so many small companies without employee health benefits and the larger firms are passing more cost to their employees. Many may not be able to afford increases and look for alternatives.

• Employer health coverage costs $5,162/employee.
• Rates continue to increase – employee ends up paying.

According to Mercer Human Resource Consulting's 2001 National Survey of Employer-Sponsored Health Plans, companies with more than 500 employees are expected to pay 12.8 percent more for active employee health benefits this year than in 2001. This would be the largest increase in more than 10 years.

Last year, large employers paid an average of $5,162 per employee for health coverage - 12.1 percent more than in 2000. “We're looking at a particularly bleak period right now,” Mercer's Blaine Bos said. "We really don't expect [double-digit cost increases] to abate for probably another three years, perhaps even five years."

To offset rising health care costs, 40 percent of large employers are increasing the percentage of an employee's premium contribution and 34 percent are increasing cost sharing.