The Mark-up by
Some Local Pharmacies on Generic Drugs is Steep-Truth!
Summary of the eRumor A television reporter in
Detroit investigated the costs of generic drugs. He accused
some pharmacies of price-gouging, with mark ups of as much at 3,000
percent. Generic drugs cost less than name brands of the same
medications, but the reporter says the lower price may still
represent a high mark-up. He also found that Costco prices
were consistently more reasonable
There seems to have been a rash of TV
reports on this subject in various cities.
The report in Detroit was in July, 2002 by Steve Wilson of channel
7, the ABC affiliate.
He went from store to store to check on prices of a drug that cost
the pharmacy $2.
Prices ranged up to $100.
He says the blood pressure medication Vasotec can cost about $76 per
The generic version often sells for $60.
But he says it costs the pharmacy less than $6.
One pharmacist admitted that the mark-up was "unconscionable."
Wilson reports that the widly-used drug Prozac sells for about $100
per month in Detroit.
The generic version sells for only $10 or so less, but costs the
pharmacy only $2.16 or less.
He found that the prices at Costco were consistently cheaper.
In Florida, the same investigation was conducted by WFTV channel 9's
reporter Barbara West in October, 2002.
She too found high mark-ups on generic drugs.
Prozac was selling for 3,000 to 5,000 percent profit.
She compared that with if a grocer who bought an orange for 20-cents
would sell it at the same mark-up, the orange would cost $10.
She quotes a spokesperson for Walgreens as saying that the pharmacies
don't make much profit on the brand name drugs and need to charge
higher profit on the generics, which they can do while still giving
the consumer a better deal than the brand name price.
She also found that Costco consistently had the best prices with
mark-ups between 86 and 423 percent, not 3,000 to 5,000.
Philadelphia's KYW-TV did the same story in November,
KYW's consumer specialist Paul Moriarty says Rite
Aid, Walgreens, Eckerd, and CVS all declined to be interviewed about
high mark-ups on generic drugs.
He too found that Enalapril, the generic version of Vasotec, selling
for $60 at Walgreens and $68 at Eckerd Drugs, even though it costs
them about $5, a 1,300 percent mark up.
He, too, found Costco to be the cheapest with a cost for Enalapril,
for example, of $12.97.
He also found lower prices at Wal-Mart and K-Mart, but not as low as
A 3/11/03 article by Wall Street Journal reporter Francesco
Fiondella reflected some of the same findings.
That article found prices for generic Prozac ranged from $2 per pill
at various pharmacies around New York to 15 cents at, once again,
A real example of the eRumor as it has
appeared on the Internet:
On Monday night (July 22), Steve Wilson, an investigative reporter for
channel 7 News in Detroit, did a story on generic drug price gouging by
pharmacies. He found in his investigation, that some of these generic
were marked up as much as 3,000% or more. Yes, that's not a typo.....
thousand percent! Mr. Wilson did a thorough research, and checked out
the major drugstore chains, discount chains, independent pharmacies, and
even checked on some Canadian pharmacies.
So often, we blame the drug companies for the high
cost of drugs, and
usually rightfully so. But in this case, the fault clearly lies with the
pharmacies themselves. For example, if you had to buy a prescription
and bought the name brand, you might pay $100 for 100 pills. The
might tell you that if you get the generic equivalent, they would only
$80, making you think you are "saving" $20. What the
pharmacist is not
telling you is that those 100 generic pills may have only cost him $10!
At the end of the report, one of the anchors asked Mr.
Wilson whether or not
there were any pharmacies that did not adhere to this practice, and he
that Costco consistently charged little over their cost for the generic
drugs. They gave the link to Costco, which I will include here, so that
can go and check prices for yourself.