Why Costco's generic drugs are so cheap
While chains like CVS and Rite-Aid depend on pharmacy profits, the warehouse retailer uses prescriptions to draw traffic.
There aren't coupons for prescription drugs, but Costco (COST) is probably wishing it could print up some "$749 off" inserts right about now.
Consumer Reports went shopping at 200 pharmacies across the country for a month's supply of five prescription drugs that just went generic: Actos for diabetes, Lexapro for depression, Singulair for asthma, Plavix for blood thinning, and Lipitor for high cholesterol.
What they found was a $749 difference -- that's 447% -- between the $916 price tag at CVS (CVS) and the $167 that Costco charged for the same five drugs. For generic Lipitor alone CVS charged $150 to Costco's $17. The generic Lexapro found at CVS for $126 could be had at Costco for $7.
Why such a big difference? Because CVS, Rite Aid (RAD) and Walgreen (WAG) draw most of their profits from the pharmacy, while Costco, Sam's Club and other discount stores consider their pharmacies throw-ins that help bulk up foot traffic.
CVS, in particular, also factors in the cost of drive-through windows, automated prescription refill systems, prescription consultation and 24-hour pharmacies that Costco's Monday-Saturday service lacks.
Americans spent an average of $758 per person out of pocket for medication in 2012, according to a recent Consumer Reports poll. Of the 1,130 people surveyed who regularly took prescription drugs -- both insured and uninsured -- 12% spent more than $1,200 last year.
With CVS' direct competitors pressed to offer the same costly amenities, Rite Aid's price for that five generic drug cocktail is a whopping $820. Even with its pharmacies as a second-fiddle throw-in, Target's (TGT) tally came out to a steep $796 -- a full $360 more than Walgreen's $436.
On the whole, Walgreen fared better than not only its biggest health-and-beauty competitors, but even grocery stores like SuperValu (SVU), Safeway (SWY) and Kroger (KR), which charged $658 for all five drugs. In fact, most prescriptions at Walgreen were only $7 more than those offered at Wal-Mart (WMT) ($426). Only Lexapro cost more at Walgreen ($105) than at the big-box retailer ($84).
Costco is truly an all American store run for the betterment of the buying public with NO strings attached.
A leader in humanity and cost sharing .
Our country is full of greedy pigs that gouge you every chance they get. Costco has made the decision not to do that and they should be applauded for it, no matter what their motivation.
CVS stores have been going up on every other street corner in my area putting all the small local drug stores out of business and I wouldn't shop at one if you paid me. They are just another huge monopoly that is financed by some billionaire conglomerate designed to eliminate the competition.
Another day in the free enterprise system that kills competition through buyouts and mergers. The employees never win and consumers pay the ultimate price eventually.
Canubellieveit, there isn't a drug store anywhere that doesn't say 20 to 30 minute wait. Your so called owner opreator store does the same thing. But if your so damn rich that you don't mind paying more for your drugs keep going to him, me I'll save the 750% and go to the big store.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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