November 15, 2007
It seems that everything we buy today is going higher and higher. The Fed's inflation scenario is so out of touch with reality since food, energy, healthcare, etc., consume so much of our monthly budgets. I hope that some of you might find this article of use. Perhaps Medco's education campaign will help.
Medco warns of vanishing nest eggs
Pharmacy benefit manager's survey reveals that many Americans underestimate their health care spending.
November 13 2007: 8:26 AM EST
FRANKLIN LAKES, N.J. (AP) -- Medical and drug costs are threatening to eat away at retirement nest eggs, as many Americans underestimate their health care spending, according to a new survey from pharmacy benefits manager Medco Health Solutions Inc.
The survey revealed an overall lack of awareness and planning for drug expenses by retirees, which is putting their savings at risk.
As a result, Medco (Charts, Fortune 500) said Tuesday it is launching an education campaign to raise retirees' awareness of how to trim their drug bills. By encouraging retirees to switch to cheaper generic drugs, the campaign could provide cost savings for Medco as well.
The survey of 1,000 Americans over the age of 65, conducted for Medco by Directive Analytics, found that one in three retirees say medical and drug costs far outpaced expectations. Results also showed that one in four retirees spend 10 percent or more of their monthly retirement income on medications alone.
In addition, the company said three out of four retirees indicated they were aware of the cost savings benefits of getting their drugs from a mail order pharmacy, but only 40 percent actually use the tool to save money on their medications.
"It's a notable contradiction that retirees are facing high drug costs, yet either are not aware of, or choose not to use, the tools they have available to save," said Donna DeNardo, senior vice president, Medco Retiree Solutions, in a statement.
As part of its education effort, Medco seeks to raise retirees' awareness of generic alternatives and the ability to take fewer higher-dose pills each day in order to reduce the number of pills purchased.
The program could benefit Medco as well. If more customers switch to generics, for example, Medco's earnings could see a boost, as the company records higher profit margins on generic drugs than on brand-name drugs.
In its third-quarter earnings report earlier this month, Medco cited earnings contributions from the early release of some generic medications, including versions of the popular high blood-pressure treatments Toprol XL and Coreg, as well as strong mail-order volume. 
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