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Shopping Around for Generic Drugs

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A simple survey of pharmacies in the Twin Cities for the price of a 30-day supply of a generic breast cancer drug revealed large variations- from $11 at Costco to $455 at Target. However, Target is willing to match the price of other pharmacies, and would charge only $11 if the customer provided proof of Costco’s price. How is this possible?

According to Lisa Gill of Consumer Reports, the prices of newer generic drugs can vary greatly. She collected price quotes for five recently released generic drugs from over 200 pharmacies, discovering that large chains such as Target and CVS charged up to 10 to 15 times more than Costco and smaller retailers. After purchasing generic drugs wholesale, pharmacies have different policies on how much to mark-up the price. Costco, for example, adds a small mark-up to the wholesale price it paid. Other retailers take the price of the equivalent brand drug and reduce it by a certain percentage to price the generic version. Interestingly, small independent retailers offered some of the lowest prices even though they most likely pay higher wholesale prices than big chains. 

Of the 200 pharmacies studied, the most surprising finding was that some were receptive to bargaining. Through requesting price matches or simply asking for a lower price, consumers could save significantly on generic drugs. These divergent pricing practices place a large burden on the consumer to shop around and even bargain for the lowest prices on generic drugs. Consumers are unlikely to expect such large pricing variations, and are unaccustomed to negotiating prices at the pharmacy.



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