Several weeks ago, I was talking to a physician in Houston, the sort of older gentleman family doctor you don’t see much of anymore. His name is Cyril Wolf. He’s originally from South Africa, but other than that, he struck me as the quintessential American general practitioner of decades past.
I’d asked him a variety of questions — what’s changed in recent years in his practice, how managed care has affected him, etc. — when suddenly his eyes fired up, his jaw set tight, and his voice took on a tone of great exasperation. He began to describe a simple but huge problem in his practice: a lot of generic medications are still too expensive for his patients to afford. Many of his patients, he explained, must pay for their drugs out-of-pocket, and yet even the generic drugs at pharmacy chains like Walgreens, Eckerd, and CVS could cost them dearly.
So Wolf began snooping around and found that two chains, Costco and Sam’s Club, sold generics at prices far, far below the other chains. 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.
I was skeptical at first. Why on earth, I asked Wolf, would anyone in his right mind fill his generic prescription at Walgreen’s instead of Costco?
His answer: if a retiree is used to filling his prescriptions at Walgreens, that’s where he fills his prescriptions — and he assumes that the price of a generic drug (or, perhaps, any drug) is pretty much the same at any pharmacy. Talk about information asymmetry; talk about price discrimination.
I had meant to blog about this, and had collected a few relevant links: a TV news report in Houston about Wolf’s discovery; an extensive price comparison compiled by a TV news reporter in Detroit; a Consumer Reports survey; and a research report on the subject from Senator Dianne Feinstein.
But I had forgotten all about this issue until reading this comprehensive article in yesterday’s Wall Street Journal, which does a good job of measuring the difference in prices between chains (most of the differences aren’t as drastic as Wolf’s example with prescription Prozac, but they are still huge) as well as the economics behind the pricing of prescription drugs in general. Perhaps the most interesting sentence in the article is this one:
After a call from a reporter, CVS said it would drop its simvastatin price [from $108.99] to $79.99, as part of an “ongoing price analysis.”
So that’s what they call it: “ongoing price analysis.” I’ll have to remember that the next time my kids catch me trying to buy a $2 toy when I’d promised one for $20.
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i used to work at a doctor’s office, and once called the different pharmacies in the area trying to find the best place for a patient who didn’t have insurance. i remember that the prices for a round of antibiotics were so varied, from probably $10 to $90, that it surprised me.
i used to work at a doctor’s office, and once called the different pharmacies in the area trying to find the best place for a patient who didn’t have insurance. i remember that the prices for a round of antibiotics were so varied, from probably $10 to $90, that it surprised me.
Does Sam’s Club require a membership for their pharmacy?
(I only ask because I don’t have a CostCo near me. *sigh*)
That said, Jesus. I’m never getting prescriptions filled at one of those places again. I mean it. I’m renewing my lapsed (because the company is evil) Sam’s Club card just for that.
Does Sam’s Club require a membership for their pharmacy?
(I only ask because I don’t have a CostCo near me. *sigh*)
That said, Jesus. I’m never getting prescriptions filled at one of those places again. I mean it. I’m renewing my lapsed (because the company is evil) Sam’s Club card just for that.
Generic drugs are prescription loss-leaders for these places. Pharmacy makes up a tiny percentage of their revenue, and it’s a ploy to get people in the door.
AWP for simvastatin — which I’m 90% sure is what your doctor friend is talking about — is significantly higher than $12-17, no matter who your supplier is. They’re losing money every time they fill a prescription for it.
Contrast this with CVS, where pharmacy made up 70% of their revenue in 2005. So keep shopping at those places — you’re helping the chains stay in business by doing so…
RJS, you are actually incorrect on this. Generic drugs are actually where the pharmacies make the MOST money. This is because it is up to the individual pharmacies to set prices on generics (whereas the brand prices are already pre-set).
In other words, if you walk into Walmart and buy a generic drug for 4 bucks, you may think you’re saving a lot of money (which you are) but compared to what Walmart has paid for that drug, they are still making a whopping profit. Now just compare that to generics that are NOT covered and for which you are paying much more.
Generic drugs are where individual pharmacies make the big bucks and that is why they push you to buy generic. Period.
Generic drugs are prescription loss-leaders for these places. Pharmacy makes up a tiny percentage of their revenue, and it’s a ploy to get people in the door.
AWP for simvastatin — which I’m 90% sure is what your doctor friend is talking about — is significantly higher than $12-17, no matter who your supplier is. They’re losing money every time they fill a prescription for it.
Contrast this with CVS, where pharmacy made up 70% of their revenue in 2005. So keep shopping at those places — you’re helping the chains stay in business by doing so…
I was just picking up a prescription from Sam’s Club yesterday ($6 for a month’s supply) and asked about the membership issue.
I was told by the pharmacist that they do not require a membership to fill out prescriptions because it is actually illegal to do so. Same for Costco.
P.S. I called Target first and they quoted me $41.
I was just picking up a prescription from Sam’s Club yesterday ($6 for a month’s supply) and asked about the membership issue.
I was told by the pharmacist that they do not require a membership to fill out prescriptions because it is actually illegal to do so. Same for Costco.
P.S. I called Target first and they quoted me $41.