Jean Lesniak has had her monthly prescriptions filled at the same drug store in Port Hope, Ont., for years, but after it recently changed hands, she was surprised when asked to pay an extra $4.99 to cover a dispensing fee.

“I used to just pick up my prescriptions and they were covered by Veterans Affairs,” says Lesniak, an 85-year-old army veteran. When the pharmacy changed hands, the dispensing fee increased, putting it above the amount Veterans Affairs Canada covers. “I just never realized a dispensing fee was part of the cost of prescriptions,” says Lesniak.

Like many Canadians whose medications are covered by employer benefit or provincial or federal plans, Lesniak was not only unaware that dispensing fees are part of the cost of their prescriptions, but that these fees vary from store to store. Having that knowledge and acting on it is one way ordinary Canadians can contribute to containing health-care spending.

The amount—$4.99—seems small compared to the $26.9 billion the Canadian Institute of Health Information (CIHI) estimates was spent on drugs in 2007. But about 84 per cent of that spending was for prescriptions—more than 455 million of them. In 2007, drugs ate up an estimated 16.8 per cent of all health-care expenditures, up from 9.5 per cent in 1985. Canadians spent an average of $818 each in 2007 on drugs, says CIHI; about 48 per cent of this is publicly financed. The not-for-profit CIHI tracks health data from sources like hospitals and health authorities for use by governments and health-care providers in developing policy.

Drug costs have tripled over the last decade, and are expected to grow another 25 per cent, or $5.5 billion annually, over the next three years, notes ESI Canada, the largest adjudicator of private drug claims in Canada, which produces an annual drug trend report.

The population is aging, and the number of prescriptions per person climbs with age-related changes to health. In 2007, Canadians filled an average of 11.4 prescriptions per capita, up from 10.3 in 2004. As well, costs for drug ingredients have gone up 67 per cent since 2000 and there’s been 20 per cent annual growth in high-cost medications for specific conditions.

It isn’t easy to control increases, but there is action at every level from laboratory to sales counter. At the manufacturer level, the Patented Medicines Price Review Board negotiates the price of drugs with pharmaceutical companies. At the store level, some private and government benefit plans negotiate for the best prices for their plan members. At the consumer level, individuals shop around for the best deals on the combination of dispensing fees and prices.

“Costs are increasing at such a rate, some figures I’ve seen (show) by 2020, there’ll be no money left in provincial budgets for anything other than medical,” says Rockie Palmer of the Federal Health Care Partnership, which negotiates lower drug prices for drug programs of six federal government departments.

Rising costs of drug claims drive up benefit plan premiums paid by employees and employers, says Wayne Lloyd, assistant vice-president of Group Products with Manulife Financial.

“By not being smarter consumers, potentially you’ll have no benefits at the end of the day because the employer will not be able to afford them,” says Michele Furman, product manager for Manulife Financial Group Benefits.

All say shopping around for the best price and dispensing fee is a good idea. “I think all of us as citizens need to feel that even when it’s not our money (that is, from our own pockets), we need to be getting our money’s worth,” says Palmer.

There are several things consumers can do to save money for themselves and/or their employer or government benefit plan. They can talk to their doctors about appropriate generic drug alternatives; ask for a three-month supply of their medication instead of a monthly refill; and shop around for the best combined price for medication and dispensing fees.

“It’s important to talk to your doctor and your pharmacist,” says Furman. Unless the doctor specifically orders no substitutions, it’s common for pharmacists to substitute the lowest cost alternative for customers. “If the plan (calls for) generics or the member has spoken to them about looking for the lowest cost drug, the pharmacist will dispense that,” says Lloyd. It’s always wise to know whether a brand-name or generic drug is best for you. Newer drugs tend to be more costly but often have the same therapeutic benefits of older brand-name or generic medications. The customer needs to confirm with a doctor or pharmacist which is best.

New drugs are protected by patents, and priced so manufacturers can recoup the costs of research and development. Once the price is set, it tends to remain the same until the patent expires, after which, competition from generic drugs tends to bring the price down. The average cost of a brand-name prescription was $64.19 in 2007, compared to $26.07 for a generic, according to IMS Canada, which tracks diagnoses, dispensing trends and drug store and hospital purchases.

Nearly half of all prescriptions in Canada are now for generic drugs. Sales of generic drugs jumped 21 per cent in 2007, according to the Canadian Generic Pharmaceutical Association. Increased use of generic drugs—due in large part to patent expiries—is one reason drug spending increased only 7.2 per cent in 2007, the smallest annual increase in a decade.

If you are paying out of pocket, generic drugs can save you money. If you are on a benefit plan that covers part of the cost of the drug and dispensing fee, you save yourself and your employer or government benefit plan money. If all your costs are covered by a benefit plan, you are stretching the plan’s budget.

Individual pharmacy owners set whatever markup and dispensing fee they think will be competitive in their market, says Sal Cimino, manager of pharmacy and professional services for Green Shield Canada, a not-for-profit benefit plan administrator. The price consumers pay for prescription drugs is made up of the cost of the drug, including the store’s markup, and the dispensing fee. The markup covers the cost of running the store, paying employees, the lease, utilities. The dispensing fee covers the pharmacist’s costs for filling prescriptions—things like consulting with doctors, counselling patients, monitoring therapy and maintaining records.

It’s important to research both markup and dispensing fee to determine which store offers the best price. Sometimes a store will advertise a low dispensing fee, but charge more for the medication. “What you need to do is phone each store and say, ‘I have 100 tablets of such and such at this strength, how much are you going to charge me to fill that, and what is the dispensing fee?’” says Cimino. As for waiving fees for seniors or veterans, Cimino, who used to own a store himself, says that’s also up to the individual proprietor. “When I owned my store I used to waive it; but $4.99, I’d be hard pressed to waive.” Fees are set to cover costs, and waiving them eats into the profit of the business, and the owner’s income.

Shopping around to find the pharmacy with the lowest dispensing fees makes good sense, especially when your employer, provincial or federal drug benefit plan caps the amount of dispensing fee they will pay. In that case, pharmacies look to the customer to pay out of pocket the difference between what the benefits plan will pay and what the pharmacy charges.

Dispensing fees ranged from $4 to $15 across the country in 2007. Ontario had the highest average submitted dispensing fees at $10.50, while in the West they were $9.49 and $8.59 in Atlantic Canada, according to ESI Canada, which specializes in optimizing the value of health benefits. The average dispensing fee claim covered in 2007 was $8.38, the company said.

Drug stores can be reluctant to give information about the combined cost of prescriptions and dispensing fees over the phone, says Palmer. In that case, see if they will accept a faxed copy of the prescription. Otherwise, the customer, or a delegate (a son or daughter, usually) has to go to each store, prescription in hand, for comparison shopping.

This paid off for Bud Sadegur, of Princeton, B.C., who was able to halve the dispensing fee on his two daily medicines. “The medication costs are relatively similar. What is vastly dissimilar are the dispensing fees. In some cases, the dispensing fee was more than the actual cost of the medication.”

Sometimes, to keep the business, a drug store will waive part or all of the fee.

Lesniak’s story has a happy ending. Her daughter, Mar-Jean Dalton, contacted the drug store and persuaded the owner to waive the difference between the store’s dispensing fee and what VAC pays. “The pharmacist called and apologized profusely and personally returned the $5 to her,” says Dalton. “He couldn’t have been nicer.”

Lesniak continues to fill her prescriptions at the store she’s frequented for so many years.

But not every pharmacy will give seniors or veterans a break. It pays to ask, and if the answer isn’t acceptable, it pays to shop around.