Prices at nearby drugstores vary by huge amounts
Charles Paul and his wife, Hazel, stopped using the motor home they bought several years ago; it sits idle behind their house in Richardson, Texas. Travel is just one sacrifice they made to pay for the cost of their prescriptions, more than a dozen medications for the two of them. "It was eating us up," says Charles Paul, 72. "We were beginning to have trouble with other bills." They found relief by switching drugstores, to one in nearby McKinney. Bills that had come to more than $800 for a one-month supply now rang up at about $500. A prescription for Avandia, to control Paul's diabetes, had cost $89.88 when he got it from a national chain but dropped down to $58 from McKinney's Smith Drug.
Smith, which claims to be the oldest drugstore in Texas, has been getting a lot of attention since a Dallas newspaper touted its astoundingly low prices. The overwhelming response from the public has been "a little scary," says co-owner Kaylei Mosier. She says the store simply marks each prescription up enough to cover its costs, but for many prescriptions that's a lot lower than at other stores.
The Smith Drug story has highlighted a little-known fact: Prescription prices vary from city to city and block to block, and a little research can save consumers hundreds or thousands of dollars. In Grand Rapids, Mich., the price of 30 tablets of 500-milligram ciprofloxacin (a generic antibiotic) at a CVS Pharmacy is $175.99; less than a mile away at an independent pharmacy, the Medicine Shoppe, the same prescription costs $24.99. In Sacramento, Calif., 90 tablets of 10-mg Lipitor, a popular cholesterol drug, cost $321.95 at a branch of Leader Pharmacies, a regional chain; the same prescription costs $193.77 at a nearby Costco. Insurance copays can make these differences invisible, but they're a huge deal to the 45 million uninsured Americans, or the millions more without prescription drug coverage.
Compare and save. Why the price swings? Howard Schiff, executive director of the Maryland Pharmacists Association, explains that pharmacies generally buy their drugs from a wholesaler, who doesn't sell to every drugstore at the same price. Once the drug is in the pharmacy, each owner chooses how much to mark it up. Because fewer than 10 percent of consumers comparison-shop for prescriptions the way they might for a quart of milk--and drug prices generally are not advertised--pharmacies don't worry that higher prices will drive people away, says Stanford economist Alan Sorensen.
"Whether it's a toaster or a refrigerator or a suit or a car, I can't think of another consumer product that one would need or want that you can't comparison-shop except for prescription drugs," says Joe Curran, Maryland's attorney general. In response, he and his staff launched a website last spring, www.oag.state.md.us/Drug prices/index.htm, where people search drug prices at pharmacies around the state. The New York State attorney general's office launched its own version last month, www.nyagrx.com, and reported over a million hits the first week. New Mexico and Maine have similar information on their state websites.
There is a downside to hopping from drugstore to drugstore. "If people price-shop, they're going to lose some protection" that comes from having one pharmacy track all your medications, says Steve Wienner, a Baltimore pharmacist. Going to many pharmacies keeps one pharmacist from noticing potentially harmful interactions between prescriptions. Many pharmacists, he says, are willing to work with customers who are trying to cut costs by pointing out equivalent drugs that are less expensive. Comparison-shopping is further complicated because pharmacies that have the best price on one drug don't usually have the lowest prices across the board, so finding a good price on one drug at a pharmacy does not guarantee a cheaper total bill. But if big savings are your biggest priority, you'd better shop around.
This story appears in the September 20, 2004 print edition of U.S. News & World Report.