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Prescription Drug Pricing
Netlore Archive:  Email flier purporting to originate from U.S. government budget analysts blames inflated prescription drug prices on price gouging by pharmacies

Description:  Email flier
Circulating since:  July 2002
Status:  Partly true
Analysis:  See below
 


Email example contributed by Joseph M., 28 January 2004:

Subject: Cost of Medicines

The ladies that signed below are Budget Analysts out of the Washington D.C. office.

Did you ever wonder how much it costs a drug company for the active Ingredients 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 chart 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
Perecent 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 I knew 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 Walgreens 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.

I would like to mention, that although Costco is a "membership" type store, you do NOT have to be a member to buy prescriptions there, as it is a federally regulated substance. You just tell them at the door that you wish to use the pharmacy, and they will let you in. (this is true,

I went there this past Thursday and asked them.)

I am asking each of you to please help me by copying this letter, and pasting it into your own email, and send it to everyone you know with an email address.


Comments:  Circulating since 2002, this oft-forwarded message has accumulated much unreliable data along the way, including the names of two government budget analysts who purportedly authored the text but actually didn't. The original message did not contain those names, nor did it feature a table comparing consumer drug prices to the cost of raw ingredients (a table whose accuracy and relevence is questionable, by the way, given that its origin is unknown and it doesn't take manufacturing costs into account).

Even so, the email accurately conveys a general truth: individual pharmacies charge widely varying prices for generic drugs, often at markups so huge they defy justification.

In the 2002 investigative report that directly inspired the message, WXYZ-TV newsman Steve Wilson found, for example, that Detroit pharmacies were jacking up the price of Fluoxetine HCL (generic Prozac) from 765 percent to more than 5,000 percent over wholesale. Though some pharmacists defended the markups as necessary, at least one admitted, in his own words, "It's not right."  Investigators in other parts of the country reported similar findings.

In 2003 I received a note from the true author of the email, Patty Clegg, who confirmed that she wrote it after viewing Wilson's report on TV. "I immediately sent out an email to everyone in my address book," she said. "I cannot believe how quickly and how far those emails spread." Clegg also confirmed that she had comparison-shopped for prescription drugs on Costco's Web site and found them cheaper than identical products purchased at other pharmacies. Costco isn't alone in applying a consistently lower markup to generic drugs, she hastened to add, but it takes diligence to locate retailers offering the fairest prices.

"The bottom line," she wrote, "is that we each must take responsibility for our own heath care. We must do the work to make sure we are getting the most for our money. I have tried my best to get the word out to 'shop around,' and now it's up to each individual to do their own research in their own community, and to help further the information to others."


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Sources and further reading:

Prescription Drug Pricing
Investigative report by Steve Wilson (WXYZ-TV, Channel 7, Detroit), 22 July 2002

Prescription Drug Price Comparison Chart
Sidebar to Steve Wilson's investigative report


Last updated: 06/11/05


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