Walgreens marks up generics by 975%

[133724]

On the Freakonomics blog, Stephen Dubner (co-author of the wonderful Freakonomics: A Rogue Economist Explores the Hidden Side of Everything) digs into the pricing on generic drugs and finds that the main-street pharmacies mark up their offerings by 975 percent!

Even once you factor in the cost of buying a membership at Costco and Sam’s Club, the price differences were astounding. Here are the prices he found at Houston stores for 90 tablets of generic Prozac:

Walgreens: $117

Eckerd: $115

CVS: $115

Sam’s Club: $15

Costco: $12

Those aren’t typos. Walgreens charges $117 for a bottle of the same pills for which Costco charges $12.

http://www.boingboing.net/2007/03/15/walgreens_marks_up_g.html

[babylonsister]

1. So, don't do your druggin' at Walgreens.

They denied me a long time ago for the meds I need, and ironically, it is a health insurance policy attached to the military. Go figure.
:eyes:

[Sherman A1]

5. Agreed

Order mine by the mail plan provided by my insurance. It is a little clunky to start, but seems to be about 40% cheaper on the copay than going to the pharmacy. I like supporting local business and all, but one must do what the plan tells you to do in this game of who can out scam each other.

[silverlib]

2. No membership required to use the pharmacy

at Costco and I do not believe one is required to use the pharmacy at Sam's.

[Selatius]

3. Snopes.com did a story on this

http://www.snopes.com/medical/drugs/generic.asp

[Psephos]

4. They can mark them up a million percent, but that doesn't mean I have to buy them

I see this on eBay all the time, too. Someone puts an item out there on BuyItNow for waaaaaay more than the usual auction price. They're waiting to pick off a well-heeled, impatient person who needs something now and thinks because it's on eBay, it's gotta be a bargain, right?

Heh heh. Costco already gets my business.

[progressoid]

6. Damn, I wish we had a costco here.

[Luminous Animal]

7. You can order online

And you don't have to be a member.

[rman]

8. There must be other market forces at work,

besides price competition - or else Walgreens would not be able to sell at that price.

[sutz12]

9. They probably have some kind of a deal...

that provides them a captive market. I don't see how they could sustain this otherwise.

[rman]

10. Sounds about right. How does captive market fit with free trade capitalism?

[gravity]

11. Insurance pays for most of it

Market forces also play a major part. If Prozac normally goes for $150, Walgreens just needs to price the generics right below it like around $130 for example to compete with it.

Even if costco sells it for 1/10th the price, they need to sell 10 perscriptions for each one Walgreen sells to make the same profit, and thats not factoring in the wholesale price of the drug. Moost people don't compare prices of persciption drugs between stores anyways, so they don't know whats going on.

[rman]

12. Do insurance companies also not compare prices of persciption drugs between stores?

[gravity]

13. I don't know

but if its cheaper than the brand name drugs, I think they will still buy the generics.

Also Sam's club and Costco require memberships which stops many potential shoppers, and allows for other pharmacies to mark up their prices. It's ironic that its still cheaper there even when the cost of membership is factored in.

Edit: It's also ironic that buying the drugs from costco are cheaper than paying the copay for many insurances

[jmowreader]

14. I wonder how many people actually pay this

Insurance companies know what drugs cost. They also know what a suitable profit margin is--say, a 100-percent multiplier.

If a 1000-count container of generic Prozac costs a pharmacy $100, the insurers will decide that, given the 100-percent multiplier, reimbursement will be 20 cents per tablet. Insurers negotiate with pharmacy chains to ensure this. The pharmacies really can't play with co-pays much--if Walgreens' copay is much higher than CVS or Eckerd's copays, people with BCBS cards won't go to Walgreens. So if there's a $10 copay and a 100-percent markup on Prozac, the pharmacy is making good money. Admittedly, $117 for 90 tablets is better money, but as a retailer I assure you products you can sell for twice what you paid are few and far between.

People without insurance would pay the $117 price tag, but hold on just a second: very few people who have no insurance of any sort can afford to either go to a mental health professional or buy a $117 bottle of pills, and to buy Prozac via private pay you must do both. (Medicaid patients on Prozac would get it through Medicaid.) I wonder how much a bottle of penicillin pills would cost you if you weren't insured--that's a drug you can walk into any emergency room in America as an indigent patient and get prescribed.

I think the real difference between the pharmacies and Costco is that Costco's just promising to make everyone pay what an insured patient would--they just added the negotiated price to the co-pay and put it on the wall.

[DarkTirade]

15. Wow... I've been meaning to get a Costco membership for a while now...

[SeattleGirl]

16. It's worth it. I did not have insurance for 2 years. For a drug I

take every day, the generic cost was $35 or so. Costco's price for the same drug is $5.

[DarkTirade]

17. I just wish I'd known about this

back when I had my surgery for my ingrown toenail... I had to take antibiotics for it. Even with my insurance it would have cost about a hundred bucks, which I didn't have. Thankfully my doctor prescribed something cheaper, the second prescription was about 30 at CVS.