Generic Drug Prices—All Over the Map

Did you know that the price you pay for a generic drug can vary by as much as 447 percent (or $749) depending on where you shop? When Consumer Reports called 200 pharmacies around the country to get prices for five blockbuster drugs that had recently gone off patent their investigators found that a month’s supply of generic Lexapro (the antidepressant escitalopram) cost just $7 at Costco yet $119 at RiteAid. Generic Lipitor (the cholesterol-lowering atorvastatin), was $15 at the online FamilyMeds.com and $144 at Target.

Naomi Freundlich has written an outstanding post about the wild variations in pricing on ReformingHealth.org. There, where she reveals that even a breast cancer drug can fetch $450 at one store (CVS) and $14 at a “local, independent drug store.”

Freundlich concludes that such disparities are not a sign of “free market competition.”“Without price transparency there is no free market —only bargains for those with the means to research prices or those lucky enough to use a nearby pharmacy that offers lower prices on generic drugs. For the millions of other Americans—many uninsured or with large deductibles—who have never considered that prices on their generic medications could vary so dramatically, the so-called free market is a sham.”

I would add that just as the government regulates prices for other necessities –namely gas and electricity—we should join the rest of the developed world, and regulate drug prices

8 thoughts on “Generic Drug Prices—All Over the Map

  1. I’ve run into this problem. I have insurance but I want to do everything in my power to make sure insurance stays affordable, so I have printed out the generics price list for all my local providers. I fill most of my prescriptions at a preferred pharmacy, but I have one that Is not on their generic list that I can get elsewhere for much less. I let them know that I’m getting another drug elsewhere to 1) make sure they know they’re not competitive on price and 2) to make sure they’re aware of all the prescriptions I take so they can watch for interaction problems.

    This is an annoyance but relatively minor. Unfortunately, the number one problem (in my opinion) with healthcare is an industrywide lack of price transparency. Without price, there is no “market”–free or otherwise.

    Imagine how monumentally ridiculous it would be to walk into a restaurant and be handed a menu without prices. “Just order and we’ll figure the price out after your meal.” Then, when you’re done eating, the check is dependent less on what you ordered than on where you work and whether your employer has a contract with the restaurant. It’s a stupid system.

    • Keith–

      Keith–

      Thanks for your comment.

      It is a stupid system.

      I can understand why a hospital may not be able to tell you how much your stay will cost. Even if they have the diagnosis when you walk in (and often they don’t)
      a surgeon doesn’t always know what he is going to find when he opens you up. Even if there are no preventable errors, a hospital can’t always predict how you will
      react to medications, etc. They may lengthen your stay. In other words, there are many unknowns.

      But when you buy a generic drug you are buying a discrete drug– not an open-ended service.

      There is absolutely no reason why it should cost X one place and Y another.

      I think what you’re doing a great service, and if enough people did it, pharmacists would become more aware of just how irrational the market is.

      Ultimately, I think the only answer is for the govt to regulate the price of generics. A retail drug should carry the same price tag everywhere in the U.S.

  2. Hi Maggie,

    I’ve been reading your blog for awhile now (and Money-Driven Medicine) and love it. But I’m a bit confused

    I’ve often heard it argued that allowing greater choice (AKA market policies) will bring down prices. They point to examples like lasik eye surgery and elective plastic surgery of areas where markets have brought down prices. Why wouldn’t that work in this instance? Can’t people shop around different pharmacies and find the cheapest prices? And wouldn’t this in turn force businesses to bring down prices by buying cheaper generics? What do you mean by the market lacking price transparency in this instance? Unless you don’t find out the cost of what you’re buying until after you have agreed to buy it, I don’t understand what lack of transparency means in this instant.

    I’d appreciate your thoughts! Thanks and keep up the great work 🙂

    • Hi Peter–

      Thank you! and I’m glad you are reading HealthBesta.

      Lasic eye surgyre and elective plastic surgery are very, very different from most health care treatments.

      Quick simply, the customer has a choice. These are “elective” surgeries. You are not going to die if you decide not to
      choose them.

      So choosing cosmetic plastic surgery is rather like choosing to buy a thin-screen TV. If the price seems to high, you can tell
      yourself “I’ll wait until the price comes down.”

      But 75% of our health care dollars are not spent on elective surgery. 75% of our health care dollars are spent when we are very,very sick.

      We don’t have a choice. We feel we must buy whatever our doctor tell us that we (or a loved one) needs NOW.

      We don’t haggle over the price. In the health care sector, patients are not “consumers”–they are sick people. They have no leverage, and are in no position to wait, or comparison shop. They are scared, and in pain. Most often, they are over 65.

      This includes generic drugs that breast cancer patients are told that they need. Or Statins that patients who fear that they will have a heart attack are told that they must take.

      Transparency would mean making all consumers aware of the variation in prices. Today, most people don’t have the time or the research skill y that the Consumer REports researchers can devote to comparing prices.

      Moreover, very very few doctors warn their patients –“You know you should comparison-shop. Here are a list of 13 or 14 places that you should check. Let alone: “I’ve checked prices. You will pay 300% less if you go here.”

      Most doctors just don’t feel that it’s their job to help their patients find affordable medications. And, as I noted, most of their patients don’t have the energy or ability to do that kind of comparison-shopping,

      I would say that it is the government’s job to protect the sick-by regulating prices, and insisting that all drug-makers and all pharmacies change the same price for the same medicine.

      Again, thanks for your comment

  3. Thanks for the comment back! Hope you don’t mind a few more questions 🙂

    Do you know where I could look up that 70% of healthcare not spent on elective care statistic?

    I’ve also heard it said that rather than whether it’s elective or not, the real issue at hand is payment. Most people pay with insurance so they don’t have much incentive to find the cheapest deal since it’s not “their money.” Also, as insurance companies often offer limited options for pharmacies in their network, it prevents many from being able to really shop around. Think these are both fair points and explanations?

    • Peter–

      Glad to hear from you again–with good questions.

      My guess it that many insurers offer limited options for pharmacies precisely for the reason you suggest. .

      I don’t really blame consumers for not comparison shopping because it’s “not their money.”

      As I noted 75% of health care dollars are spent when the patient is very sick–often in pain, scared, and older.
      They are not in a position to “comparison shop”–nor should they have to.
      The government should regulate prices and make sure that they are transparent.

      Finally, the stat saying that 75% of healthcare dollars are spent when we are very ill (not on elective procedures) comes from the CDC (Center for Disease Control); “As a nation, 75% of our health care dollars goes to treatment of chronic diseases.” http://www.cdc.gov/chronicdisease/overview/index.htm
      These are diseases that do not kill quickly, but cause patients to suffer for many years: many cancers, heart disease. diabetes, etc.

  4. Very interesting. I never thought to double check prices from one pharmacy to the next. I usually opt for Walmart since they tend to be the cheapest in my area. Maybe a little price comparison shopping is in order.

    • Kelly–

      Thanks for commenting. Yes, it does sound like we should all comparison shop when buying generics. If a person doesn’t have the time to run around to 4 or 5 stores, there is always the phone . .