NCPA - National Center for Policy Analysis


May 25, 2007

Big-box retailers like Wal-Mart and Target have entered a drug price war with each other, meaning lower prices for consumers, says

The effect has been widespread:

  • Wal-Mart's announcement that it was launching a test program to sell 291 generic drugs for $4 a prescription in the Tampa area set off a scramble among all pharmacy retailers.
  • Target matched Wal-Mart's offer immediately and K-Mart publicized its 90-day generics for $15.
  • Other regional supermarket stores like Giant Eagle of Pennsylvania and Meijer of Michigan even started offering a handful of generic antibiotics for free.
  • The benefit for consumers is striking -- the National Association of Chain Drug Stores say the cost of a 30-day supply of an average generic prescription drug was about $29.82 in 2005, compared with $101.71 for name-brand prescriptions.

The simple $4 price has also brought transparency to the retail drug arena.  Until recently, when a drug's patent expired, pharmacies would charge as much as they liked for the generic version.  One study found that the mark-ups would be as high as 4,000 percent.  For instance, in 2004, health economist Devon Herrick found that a 30-day prescription of Prozac's generic version, Fluoxetine, was selling in Iowa for $55, in some places in Florida for $43, in Virginia for $45, and at the discount wholesale club Costco Wholesale for $7.09.

"People are just not aware of these variations, and most of them don't compare prices," says Herrick, a senior fellow at the National Center for Policy Analysis. "Pharmacies take advantage of consumers' lack of knowledge and mark up prices substantially."

Source: "Drug Wars At The Big-Box Stores,", May 25, 2007.


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