We all know the frustration of going to our local pharmacy and reeling from shock at the exorbitant prices of drugs. But on top of the fact that pharmaceutical drugs here in the U.S. are more expensive than in other countries, it adds insult to injury having to to deal with the fact that drugs can vary so much by price here, even from pharmacy to pharmacy!
What are the differences in prices of drugs from pharmacy to pharmacy?
The disparity in prices of pharmaceutical drugs can range from minimal to downright huge. Take the drug Lipitor for example, commonly used to combat high cholesterol. The generic version of Lipitor, called atorvastatin can cost as little as $9 at your local Walmart, while it could run you over $200 at a different pharmacy. This is not only the case with generic drugs as brand name drugs can also dramatically vary in price depending on the place you go to. Januvia which treats type 2 diabetes, can cost as much as $573 at one pharmacy but, almost $100 less, costing around $477 at a different pharmacy. Compare that price to a pharmacy across the pond, with our neighbors in Canada, and they’re enjoying a 70% discount on the same drug, with it costing them only $128.98!
Navigating the world of pharmaceutical drugs and trying to find affordable prices for your everyday medications can be incredibly confusing, dizzying and disheartening.
So, what is going on here?
How can drugs vary so much in price from pharmacy to pharmacy?
Just like the question of why prices of pharmaceutical drugs are generally so high in this country comes down to lack of government regulation, the same is true for the large discrepancies in prices between pharmacies. Government regulations in other countries help both keep prices down and at a more affordable range, as well as enable much more uniformity of prices.
The pharmaceutical industry is operated upon the goal of generating the highest profits rather than keeping prices affordable for consumers. These include profits for the pharmaceutical companies who manufacture the drugs, as well as the pharmacies that eventually distribute them to consumers. Once again due to lack of government regulation, pharmacies have the freedom to charge what they want on prescription drugs. Some of these disparities in drug costs are due to the fact some pharmacies are motivated to attain the highest profits possible, while others will price their drugs more fairly.
Of course, just like in any other business, pharmacies have to account for their regular operational and business costs. These overhead costs including rent, insurance, salaries to their employees, etc., are taken into consideration when determining the prices of prescription drugs to charge consumers. Consequently, pharmacies must markup their prices, keeping them above wholesale acquisition costs to ensure they can still make a profit.
Normally, when you pick up a prescription drug, unless you're paying out of pocket, your insurance plan will enable you to cover only a co-pay. Consequently, this means you usually have no idea of the actual cost of the drugs, or how much the pharmacy spent on them either. The lack of transparency within the pharmaceutical industry means that as a consumer, you have less access to information about these prices of prescription drugs.
Drug companies set the original prices known as list prices, and wholesale pharmacies will purchase drugs from the drug companies before they eventually reach the pharmacy you will go to to pick up your prescription. PBMs (pharmacy benefit managers) representing various health insurance companies will typically negotiate on prices of drugs with the drug companies. Whatever prices the PBMs are able to negotiate will impact the price charged to your health insurance company and ultimately what you will end up paying for your prescription drug at the pharmacy counter.
Dealing with prices of prescription drugs can be very overwhelming. Thankfully, companies like CareCard may offer you options to help make your healthcare costs more manageable. Find out your options today.