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Over-the-Counter versus Prescription Drugs

December 14, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Navitus Clinical Journal – December 2011

Hundreds of drugs are available over the counter, including, but not limited to, cough and cold medications, pain relievers (aspirin, ibuprofen) and heartburn drugs. Over-the-Counter (OTC) drugs are drugs that you can buy without a prescription. Many of these drugs have been available for a very long time and have long track records for safety. Others are newer and often started out as prescription drugs. Some drugs that have become available as OTC in the past few years include heartburn drugs – Zantac, Pepcid, Prilosec OTC – and the allergy drug Claritin.

Why do drugs become OTC?
Drug manufacturers have an incentive to make their product(s) available OTC, since it is easier for patients to purchase a drug over the counter rather than via a prescription from their doctors. Because of the availability of OTCs, switching a drug to OTC can increase the drug manufacturer’s sales.

Drug manufacturers may also want to have their product available OTC as part of a larger strategy to protect and increase their profits. This usually happens when a prescription drug’s patent is about to expire. For example, when Prilosec’s patent expired, the manufacturer petitioned the Food & Drug Administration (FDA) to make it available over the counter, while at the same time introducing a “new,” chemically similar prescription drug, Nexium.

Regulation and safety of OTCs
The FDA regulates OTC drugs, just as it regulates prescription drugs. The FDA decides whether to allow a drug to make the switch from prescription to OTC. To approve a drug as an over-the-counter drug, the FDA must find that:

  • Its benefits outweigh its risks. In other words, the improvements to the patient’s health from taking the drug are more valuable than any negative side effects.
  • Its potential for misuse and abuse is low. The drug should not be habit-forming and should not encourage people to overuse it.
  • Consumers can use the drug for self-diagnosed conditions. The drug is not intended for a condition that needs testing or a doctor’s diagnosis, such as high cholesterol. Instead, the drug treats a symptom that is obvious to the average consumer, such as headache or allergy.
  • The drug can be adequately labeled. The warnings and instructions for use are clear and easy to understand without any training.
  • The drug does not need a doctor’s supervision, and the drug is easy to use. For example, the drug does not need a doctor to monitor and change the dosage.

In general, the risks or side effects of OTCs are low, how to use them is clear, they treat conditions that patients can easily recognize, and they give consumers greater choices.

Are OTC’s less expensive than prescriptions?
It depends. OTCs may be covered by your plan sponsor. If that is the case, you may only need to pay a copay for these drugs. Depending on your plan sponsor’s plan design, the copay may be less expensive than the cost of the OTC. Alternatively, your plan sponsor may not cover the OTC you need, but it may cover a generic version of that drug. In this case, the generic version is likely less expensive than the OTC.

As dozens of blockbuster drugs begin to lose their patents in the next few years, we can expect to see more switches from prescription-only to OTC.

Flexible spending gets more rigid

October 04, 2010 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Chicago Tribune | 10.1.2010 | By Gregory Karp

Beginning Jan. 1, you'll need a prescription to purchase over-the-counter drugs tax-free

If you have a health care flexible spending arrangement (FSA), commonly known as a flexible spending account, through your employer, it’s about to become less flexible.

The coming change means you might want to alter your FSA contribution during this year’s open-enrollment period for health benefits. New federal regulations that take effect Jan. 1 require a prescription for drugs and medications purchased with FSA money, limiting purchases you can make tax-free.

The same rules apply to health reimbursement arrangements (HRA), health savings accounts (HSA) and the less-common Archer medical savings accounts (MSA).

That means no more tax-free purchases of over-the-counter cold and flu medications, pain relievers and allergy meds without a prescription. The prohibition is part of the Affordable Care Act enacted in March.

The good news is the new rule pertains only to drugs and medicines. You can still buy over-the-counter medical supplies. So, besides such purchases as crutches, medical-testing kits and joint supports, you can still use FSA money for standard medicine cabinet stock, such as Band-Aids, contact lens solution and hearing-aid batteries. Some plans allow the purchase of suntan lotion with a sun protection factor (SPF) of more than 30 and even hand sanitizer. Big-ticket expenses such as eyeglasses and teeth braces are still allowed. And the new rule specifically exempts reimbursements for the cost of insulin, which you can still buy without a prescription.

If you have an FSA available through your employer, here’s what you need to know.

* FSAs are still a good deal. An FSA is a benefit typically offered by large employers to help workers defray medical costs not covered by insurance. You designate a yearly amount to contribute to the FSA. Your employer deducts a prorated amount from each paycheck before taxes. Whenever you pay for an approved medical item, you draw down on your fund of pledged contributions, often with a dedicated debit card.

The account allows you to save money by purchasing health care-related items with pretax money, essentially giving you a big discount. The problem with FSAs is they are “use it or lose it.” You must use the FSA money by the end of the calendar year, though many employers extend the deadline into the following year. Otherwise, you forfeit the balance. FSA money was typically used to pay for medical co-pays, deductibles and prescriptions. In 2003, the IRS loosened rules on what you could buy with FSA money, allowing over-the-counter medications and medical supplies. The new rule essentially reverses part of the 2003 change.

However, over-the-counter medicines aren’t a big part of FSA spending, on average. Only 9 percent of FSA reimbursement claims, and only 3 percent of FSA dollars, are for purchases of over-the-counter drugs and medicines, according to CBIZ, a professional-services company that processes 46,000 FSA claims per month. So, there are still plenty of tax-free purchases to make with an FSA, and literally hundreds of dollars to be saved for many households.

“I hope people continue to use their FSAs. They just have to be a little bit careful about the amount of their contribution,” said Melissa Labant, a tax manager at the American Institute of CPAs.

* Re-evaluate. During open enrollment this year for your company benefits covering 2011, take a critical look at how much money you should commit to your FSA, said Philip Noftsinger, president of the payroll-business unit of CBIZ. Many plans have online sites that allow you to see previous FSA purchases, he said. How much did you spend in 2010 and 2009 on over-the-counter drugs and medicines? If it’s a big dollar amount, you might want to reduce your 2011 pledge to your FSA, but most people should be fine leaving the contribution the same, Noftsinger said.

* Stock up. Smart FSA users know to stock up on medicines and supplies to exhaust their FSA fund every year. This year, use FSA money to stock up on over-the-counter drugs and medicines before Jan. 1. For example, if it’s a choice between stocking up on over-the-counter medications or paying a bill for kids’ braces that could be paid after Jan. 1, choose the meds, said Rob Wilson, president of outsourcing firm Employco USA, in Westmont, Ill., which helps small businesses set up employee-benefit plans like FSAs.

Even if your employer’s plan includes a grace period for FSA spending that spills into 2011, Jan. 1 is still the deadline for using FSA money to buy over-the-counter meds, the IRS says. Don’t worry if you aren’t reimbursed before New Year’s Day. You just have to make the purchase in calendar year 2010.

* Get a script. A minor loophole or workaround in the new rule is that you can still buy over-the-counter medications if they’re prescribed by your doctor. So, the advice is to become less shy about asking doc to whip out his prescription pad. If during an exam he says, “give the toddler Children’s Tylenol,” make him write a script so you can buy it with FSA money.

“It doesn’t cost anything extra to ask for a prescription, and then you can use your FSA,” Labant said.

However, buying over-the-counter medicines with FSA money will be more of a hassle. You’ll have to submit for reimbursement not only the receipt but the prescription, too, according to IRS rules. That’s more complicated than simply buying aspirin with your FSA debit card, often called a flex card.

“You’re probably not going through that effort for medications you keep in your house for the occasional headache or sunburn,” Noftsinger said.

Another change with health FSAs is coming in 2013. That’s when the government puts a $2,500 cap on money you can squirrel away in a health FSA, or half of what many companies allow you to put in today. Nearly 20 percent of FSA participants pledge more than that, CBIZ said.

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