Lee Kirksey, MD  
Cleveland , OH

Specialties: Peripheral Arterial Disease, PAD

Interests: vascular, specialist, treatment options
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Local Pharmacy's Price Gauging on Common Medications

May 13, 2008 - 12 comments







high cholesterol


Heart Disease



This is worth reading. Be sure to read to the end. You will be amazed.

Let's hear it for Costco!! (This is just mind-boggling!) Make sure you read all the way past the list of the drugs The woman that signed below is a Budget Analyst out of federal Washington , DC offices.

Did you ever wonder how much it costs a drug company for the active ingredient in prescription medications? Some people think it must cost a lot, since many drugs sell for more than $2.00 per tablet. We did a search of offshore chemical synthesizers that supply the active ingredients found in drugs approved by the FDA. As we have revealed in past issues of Life Extension, a significant percentage of drugs sold in the United States contain active ingredients made in other countries. In our independent investigation of how much profit drug companies really make, we obtained the actual price of active ingredients used in some of the most popular drugs sold in America.

The data below speaks for itself.

Celebrex: 100 mg
Consumer price (100 tablets): $130.27
Cost of general active ingredients: $0.60
Percent markup: 21,712%

Claritin: 10 mg
Consumer Price (100 tablets): $215.17
Cost of general active ingredients: $0.71
Percent markup: 30,306%

Keflex: 250 mg
Consumer Price (100 tablets): $157.39
Cost of general active ingredients: $1.88
Percent markup: 8,372%

Lipitor: 20 mg
Consumer Price (100 tablets): $272.37
Cost of general active ingredients: $5.80
Percent markup: 4,696%

Norvasc: 10 mg
Consumer price (100 tablets): $188.29
Cost of general active ingredients: $0.14
Percent markup: 134,493%

Paxil: 20 mg
Consumer price (100 tablets): $220.27
Cost of general active ingredients: $7.60
Percent markup: 2,898%

Prevacid: 30 mg
Consumer price (100 tablets): $44.77
Cost of general active ingredients: $1.01
Percent markup: 34,136%

Prilosec : 20 mg
Consumer price (100 tablets): $360.97
Cost of general active ingredients $0.52
Percent markup: 69,417%

Prozac: 20 mg
Consumer price (100 tablets) : $247.47
Cost of general active ingredients: $0.11
Percent markup: 224,973%

Tenormin: 50 mg
Consumer price (100 tablets): $104.47
Cost of general active ingredients: $0.13
Percent markup: 80,362%

Vasotec: 10 mg
Consumer price (100 tablets): $102.37
Cost of general active ingredients: $0.20
Percent markup: 51,185%

Xanax: 1 mg
Consumer price (100 tablets) : $136.79
Cost of general active ingredients: $0.024
Percent markup: 569,958%

Zestril: 20 mg
Consumer price (100 tablets) $89.89
Cost of general active ingredients $3.20
Percent markup: 2,809

Zithromax: 600 mg
Consumer price (100 tablets): $1,482.19
Cost of general active ingredients: $18.78
Percent markup: 7,892%

Zocor: 40 mg
Consumer price (100 tablets): $350.27
Cost of general active ingredients: $8.63
Percent markup: 4,059%

Zoloft: 50 mg
Consumer price: $206.87
Cost of general active ingredients: $1.75
Percent markup: 11,821%

Since the cost of prescription drugs is so outrageous, I thought everyone should know about this. Please read the following and pass it on.
It pays to shop around. This helps to solve the mystery as to why they can afford to put a Walgreen's on every corner. On Monday night, Steve Wilson, an investigative reporter for Channel 7 News in Detroit , did a story on generic drug price gouging by pharmacies. He found in his investigation, that some of these generic drugs were marked up as much as 3,000% or more. Yes, that's not a typo.....three thousand percent! So often, we blame the drug companies for the high cost of drugs, and usually rightfully so. But in this case, the fault clearly lies with the pharmacies themselves. For example, if you had to buy a prescription drug, and bought the name brand, you might pay $100 for 100 pills.

The pharmacist might tell you that if you get the generic equivalent, they would only cost $80, making you think you are 'saving' $20. What the pharmacist is not telling you is that those 100 generic pills may have only cost him $10!

At the end of the report, one of the anchors asked Mr. Wilson whether, or not there were any pharmacies that did not adhere to this practice, and he said that Costco consistently charged little over their cost for the generic drugs.

I went to the Costco site, where you can look up any drug, and get its online price. It says that the in-store prices are consistent with the online prices. I was appalled. Just to give you one example from my own experience, I had to use the drug, Compazine, which helps prevent nausea in chemo patients.

I used the generic equivalent, which cost $54.99 for 60 pills at CVS. I checked the price at Costco, and I could have bought 100 pills for $19.89. For 145 of my pain pills, I paid $72.57. I could have got 150 at Costco for $28.08.

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Avatar universal
by james1256, May 14, 2008
I also tried costo and other big chain pharmacies, I found an independent pharmacy named AMERICA'S PHARMACY and they had wonderful prices. I shopped around and they met or even bet prices other pharmacies in the area have been charging me...Not only do they have great prices they have a wonderful staff that treated me and my family with the upmost respect.....

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by Lee Kirksey, MDBlank, May 17, 2008
Good info

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by swampcritter, May 24, 2008
This post goes from medicine into economics, and is good lesson in how to evaluate the price of a good.

It may cost $2.00 to synthesize the active ingredient for a $20.00 pill. But that price is only the cost of manufacturing, not research, development, permits, installing the factory equipment to make the drug, quality control, litigation, and yes, marketing.

The cost of making the 2nd pill is $2.00. What is the cost of making the first pill, from initial studies, all the way down to FDA approval? According to Joe Dimasi, an economist at Tufts who has extensively studied this, it is about $600 million. The reason that the cost is so high is that many drugs never make it off the drawing board or through initial trials.

The same reasoning applies to the local pharmacy. In order to open a pharmacy, someone has to acquire the land, build the building, get zoning authority, get licensing, and hire the people involved. In addition, regulations, especially those that mandate electronic prescriptions and privacy, also increase costs.

So the cost of filling the second prescription at the store is the cost of keeping the store open and paying the pharmacist. However, the cost of that first prescription is at least hundreds of thousands of dollars.

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by Lee Kirksey, MDBlank, May 24, 2008
Some of the highest prices for medications are currently being charged by large retail pharmacy chains like CVS. In most areas of US, the days of the privately owned "mom and pop" local pharmacy are over. If you are offering Mr Dimasi's information to suggest that the vendor's markup on the medication price is not net profit but is a necessary evil of "the cost of business"; then market forces should eventually adjust to force all of these retail pharmacies out of business if they do not adjust the price of medications for the consumer to be in line with the likes of online vendors and the walmart's of the world. Following your line of thinking, or Mr Dimasi's; Costco, Walmart and Medco must have a more efficient business model to mitigate the costs of zoning, licensing and construction.   A capital market should adjust to eliminate those who cannot provide the best service, most reasonably priced to the largest number of consumers. Say good bye to the price gauging retail pharmacy. Good riddens.  It sounds eerily like the logic presented by the colluding oil companies in front of the US Senate this week. The explanation that the record breaking oil profits experienced from $4.00 gasoline are merely to balance out the low profits returned in previous years.  I think that if you have a business model that allows you to collude to extort the public, you should fess up and admit what everyone already knows. It's called the fleecing of America, or the American Way

Avatar universal
by jim62, May 25, 2008
"Good riddens"  ???

Don't give up your day job.


Avatar universal
by herbaldude5, Jun 01, 2008
Working in a pharmacy, I rarely see such high profit margins. Cost versus what we charge may differ by around $20 average. Patients always ask how much the "cash" price of drugs are if they have no insurance and it is never "Acquisition Cost $20 Price: $100". You seem to like costco a lot. Costco is a wholesale warehouse. The margins they make on their other products can offset the lower profit margins in their pharmacy department. Walmart has their $4 list because they may see decreasing profit margins week after week after week, but the customers coming into the store and picking up a few items here and there as they enter and leave. That compensates for the smaller profit in one department by increasing the profit in the others. Having the generic lists for $4 and the like does increase your volume, about 100 scripts a day more than before the start of the program where I work. Lower profit but greater volume, it's not a lot of difference in the big picture of economics.

I don't know about CVS or other pharmacies, but most of the ones I have been to and called on for price matches have relativly the same cost, give or take a dollar or two. Costco you need to have a membership, that also helps you to afford making less profit. Memberships may not be expensive, but multiply a yearly membership of $50 by thousands of customers in a city and multiply that by hundreds of stores, and you get a lot of money to afford lower profits. Think about it, you PAY to shop there.

Avatar universal
by RPhGrunt, Jun 12, 2008
Several interesting points. I am a pharmacist and have seen the inside business models of both Medco and Walgreens, as well as the Mom-and-Pop pharmacies. The "contracted" reimbursement for insured patients on drugs can be just a $1 or $2 above the cost to dispense (the cost to dispense includes salaries, building, utilities and such - as well as the cost of the medication to the pharmacy). The estimated cost to dispense is anywhere from $11 to $15 per prescription in a community pharmacy. Obviously the Mom-and-Pop pharmacies have difficulty competing against a large mass market retailer like Walmart that can use low priced prescriptions (in which they lose money or just break even on the cost of the medication) to entice shoppers which they hope will make up the difference in profit by buying other merchandise.  I have also seen Medco manipulate data to project the "effeciency" of mail service. The "true" cost to consumers is not represented by the lower copay you may pay for the mail order drug - you pay in higher premiums (or in lack of a lower premium) for health insurance. Much of what we see in health care is a result of uncoordinated health policy and funding mechanisms. Every sector has been warped by the current health care environment and is just trying to thrive as best as it is permitted. It is up to the citizenry to decide what is "fair and equitable". Everyone deserves rational healhcare and needed medications, we need to decide as a nation how to reach that goal, otherwise we will have more of the same shell game and bickering as occurs now.

Avatar universal
by shockedintheSW, Jul 07, 2008
Just stumbled upon this blog wondering if what Walgreens does is legal. Last month I had to fill two prescriptions, unfortunately it was an hour after my usual pharmacy (Sam's Club) had closed. It was for clyndamyacin (anti-biotic) and Percocet for pain. Of course I always make sure that a generic is used to keep cost down. I was floored when I went to pick up the prescription! I was told that even with the generics & what my insurance would cover (Medicare) the total would be $83 and some odd cents!! In shock, pain & feeling miserable in the first place I decided to ask for my prescription back and wait for Sam's to open in the morning. No way was I able to afford that, on disability and un-employed...there was no way! I filled it the next morning at Sam's...the GRAND TOTAL (FOR THE EXACT SAME SCRIPT)...drumroll please...$2.08 (THAT IS TWO DOLLARS AND EIGHT CENTS)!! This has to stop. I see my elderly parents spent hundreds a month on their meds at Walgreens and did a comparison, they would end up paying well under a hundred dollars if they would switch. But they are afraid of the hassle to switch and well, just don't know better & won't listen to me. Shame on them (Walgreens) and I feel sorry for the hundreds of thousands of people that are being taken advantage by this company.

Avatar universal
by Rita75019, Jun 30, 2009
Price gauging?  Could you mean gouging?

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by sem363, Apr 14, 2010
I too just stumbled upon this blog...prices fror medication have varied widely....however now many pharmacy chains
have the discount generic medication programs ..they sell a set  fomulary of medications at a fixed price..as low as $4 for a 30 day supply.However each chain sells a  different group of medications ..making it difficult for  a patient or  physician to do a search easily.. a web site  ..  www.ezmedicalinfo.com ..... helps with this process...one can search the available medication using the alphabetical listing or list by condition.One can  search by store  name too.

Avatar universal
by DE1953, Apr 28, 2010
Why is there such a lack of outrage regarding pharmaceutical price gouging?  It is purely disgusting the level of greed that has permeated the industry.  How is it that they have TV spots on every station, at any time and many times an hour.  And how dare they market to me, with no training or education in the area of medicine to make a decision like that for myself.  There needs to be enforceable regulations put in place where the pharmacies are fined dearly for not complying.  Hit them in their pockets like they hit all of us.....

Avatar universal
by ashishtyagi, Jul 29, 2013
My father bypass surgery (CABG). has been done in 2005 after he is having chest pain so that we did angiography test after test doctor said his svg to pda is 100% blocked and rest three LIMA to LAD SVG to OM and SVG to Diagonal is normal. due to 100% blockage doctor refused the angioplasty operation  for SVG to PDA and  still he is having pain after taken so much medicine. now he is using sorbitrate during high pain after taken the sorbitrate he felt relaxed. please suggest me what to do for this problem. please please.

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