Travel-for-Treatment Provides Access to Cost-Effective Prescription Drugs

Surging health care inflation and rising prescription drugs prices are primary factors that thousands of Americans consider when traveling for medical treatment to other countries to realize significant cost savings.

Travel-for-treatment, also referred to as medical tourism, is broadly defined as going beyond national borders to access more affordable medical care, including lower-cost prescription drugs. The global medical tourism market is projected to grow from $13.98 billion in 2021 to $53.51 billion in 2028 at a CAGR of 21.1% in 2021-2028.

According to the Medical Tourism Association, approximately 14 million people travel to other countries for medical care annually. McKinsey and Company reports that 40% of the people travel to countries to seek medical care for advanced technology coupled with highly trained professionals. This shift is also because patients require quick medical service without a lengthy waiting period.

This opportunity is rapidly becoming highly sought as a cost-effective treatment option for employer-sponsored and self-insured health plan participants. Cost challenges, especially for the underinsured, as well as health care reform considerations, have caused major US health insurers to jump onto the travel-for-treatment trend.

US Health Care Spending from a Global Perspective

Americans are paying higher prices for health care services than any other country. In 2021, the United States spent 17.8% of gross domestic product (GDP) on health care, nearly twice as much as the average Organization for Economic Cooperation and Development (OECD) country. This includes spending in subsidized health programs, such as Medicaid and Medicare, as well as employer-sponsored coverage and self-insured plans.

Prescription drug prices in the United States are more than 2.5 times as high as those in similar high-income nations. The health care system spent $603 billion on prescription drugs (before accounting for rebates) in 2021, of which $421 billion was on retail drugs. Specialized medications account for 55% of the drug expenditure in the United States, which is expected to rise at an 8% compound annual growth rate through 2025.

According to a RAND study, brand name drugs are the primary driver of higher prescription drug prices in the United States. The gap between prices in the United States and other countries is even larger for brand-named drugs, with US prices averaging 3.44 times those in comparison nations.

Inflated Prescription Drug Costs: Sustaining Employee Health Coverage as a Benefit

Prescription drug costs are a concern among employer groups of all sizes that are seeing an increase in employee utilization of health care services that require additional medication expenditures. As a result, employers can expect moderate to significant cost increases in their health plans.

According to Mercer, health benefit cost growth will accelerate to 5.6% in 2023. This financial burden impacts employers and employees in various ways, including employee premium contributions, deductibles, and co-pay increases that lead to higher out-of-pocket costs. Given financial strain, many participants resort to postponing treatment, do not fill scripts, or ration and skip prescription doses.

As employer groups set priorities to sustain medical coverage as a benefit, many are considering alternative approaches to mitigating costs associated with the surging prices of specialty drugs, including embracing travel-for-treatment programs. Financially incentivizing employees to travel across borders for treatment and prescription medications is one initiative intended to lower the cost of insurance and health care services.

Medication Procurement in Mexico

Mexico is the second most popular destination for medical tourism globally, with an estimated 1.4 million to 3 million people coming into the country to take advantage of inexpensive treatment in 2020, as reported by Patients Beyond Borders.

According to the International Trade Administration, Mexico is the 15th-largest market for pharmaceuticals in the world, and the second in Latin America after Brazil. The pharmaceutical market in Mexico has divisions for patented medicines, which represent 51% of the market by value, generics with 35%, and OTC products with the remaining 14%.

Mexican pharmacies offer branded prescription medications at lower prices than the United States. The price difference is significant, as certain medications cost up to 80% less when procured in Mexico.

To legally purchase prescription drugs in Mexico, Americans must comply with the same protocols as they would in the United States. This means obtaining prescriptions from a licensed Mexican physician and buying them at a registered Mexican pharmacy. When entering the United States with FDA-regulated products in personal baggage or sending products by mail or courier from abroad, the FDA has guidance that governs personal importations.

Self-funded employers can leverage this opportunity to achieve improved health care outcomes for their employees at a fraction of their current health care spend. A self-insured health plan allows an employer to fund the company's employee medical benefits offerings directly.

Rather than pay premiums to an insurance carrier—such as Blue Cross Blue Shield, Aetna, or Cigna—to cover employee benefits, a business will pay out-of-pocket from company assets to cover claims. These plans provide health insurance coverage to more than 100 million Americans.

Travel-for-Treatment as a Cost Savings Strategy

Self-insured sponsors are increasingly looking to sustain this offering to employees who simultaneously improve their member experience and reduce the cost of quality care. Even though the increased insurance cost has shifted to working Americans, US employers are identifying self-funding strategies that reconcile health care offerings with the business's financial goals—attracting and retaining healthy employees while maintaining the bottom line.

Employers typically cover the procedure cost and care involved when a participant elects travel for treatment. As a result, a procedure that might have required the patient to pay toward their deductible, coinsurance, and cost shares during a calendar year—often amounting to $5000 or more—will cost the patient nothing. The patient not only avoids a significant expense but, even more importantly, benefits from the more consistent, data-driven quality of health care.

Coordination of Safe and Effective Cross-Border Medical Travel

Most US employers who provide their employees a travel-for-treatment option refer their participant to a Center of Excellence. These US-based networks help coordinate and support travel for treatment to ensure a high level of quality while significantly lowering the cost relative to the health care system.

As a trusted partner for cross-border health care, Centers of Excellence provide pre-operative and post-operative services in the United States and coordinate surgical procedures and clinical care in Mexico. Procedures done in Mexico are performed by board-certified physicians at internationally accredited hospitals—from renowned physicians on either side of the border to state-of-the-art facilities that follow US clinical protocols. Concierge service models maximize the patient experience.

Best Practices When Using a Mexican Pharmacy

Drug purity, safety, and efficacy should be primary concerns, as these medications—sometimes infusion therapies—cannot be monitored or guaranteed unless administered by a reliable, trustworthy clinician licensed and credentialed by the Mexican government. To obtain legal and safe medications from Mexico, US travelers should abide by these protocols:

1. Obtain a Valid Prescription

Get a written prescription from a Mexican physician licensed by Mexico's federal government. We recommend you verify their credentials at www.cedulaprofesional.sep.gob.mx.

2. Locate a Travel-for-Treatment Intermediary or Pharmacy

After a consultation with a medical professional, purchase the prescription from a reputable pharmacy that can provide evidence of a valid license to operate within the Mexican state location. Federally-approved suppliers are a source of authentic medications, serving as trusted intermediaries between licensed pharmacies and their retail customers. This process helps to ensure product safety and quality.

3. Confirm the intermediary or pharmacy only dispenses FDA-approved and COFEPRIS-registered medications

Sometimes, medications have different brands and trade names in Mexico. Before purchasing, it is essential to check for the prescription's correct generic or scientific name.Ask the physician if they purchase their medicines from COFEPRIS-licensed suppliers. *COFEPRIS (Commission Federal para la Proteccion contra Riesgos Sanitarios), is Mexico’s equivalent to the FDA. Illegal "pop-up pharmacies" are NOT COFEPRIS licensed. Ensure a licensed Mexican physician administers the drugs as Mexico requires and as the FDA enforces for exportation to the United States.

4. Be Cautious of Counterfeit Medications, Recognize Signs of Tampering

Consumers should be cautious of counterfeit medicines. Sometimes they resemble authentic brands, but these knockoff medications may be ineffective, have the wrong strength, or contain harmful ingredients. Always ensure drugs come in their original unopened packaging, tamper-resistant seals are intact and there are no signs of damage.

About the Author

Michael R. Agostino, RPh is CEO of NASH. Mike is a registered pharmacist and a seasoned entrepreneur with over 30 years of experience in the healthcare industry. Value creation, strategic shaping, and building strong industry relationships fuel Mike's purpose.