4/4/2013 12:35 PM ET|
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.
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).
ALWAYS GO TO YOUR LOCAL INDEPENDENT PHARMACY!!!!!
Freehold Boro Pharmacy
31 East Main St
Freehold NJ 07728
Total for 1 month supplies of all 5 medications = $77.75
Total for 3 month supplies of all 5 medications = $162.75
I am assuming the prices listed in this article are for 1 month supplies, based on the fact that ALL box and chain pharmacies set their generic prices by "discounting" the price of the brand name drugs. We set our prices based on the cost of the actual medications. Our price for 3 months worth of these 5 medications is still less than Costco. ALWAYS SHOP AT YOUR LOCAL INDEPENDENT PHARMACY!!! Aside from offering free delivery and personalized service, how else would we survive a half a block from the CVS if we weren't getting all their customers?!
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