The Mark-up by Some Local Pharmacies on Generic Drugs is Steep-Truth!

Summary of 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

The Truth:

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 month.
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, 2002.
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 Costco.

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, Costco.


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 drugs
were marked up as much as 3,000% or more. Yes, that’s not a typo….. three
thousand percent! Mr. Wilson did a thorough research, and checked out all
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 drug,
and bought the name brand, you might pay $100 for 100 pills. The pharmacist
might tell you that if you get the generic equivalent, they would only cost
$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 said
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 you
can go and check prices for yourself.