Is There Price Gouging on Generic Drugs?
Oct. 22, 2003 -- Health insurance only covers some of 68-year-old Loretta Jones' prescriptions, so to pay for all of them, plus other expenses, the Albuquerque, N.M., senior remortgaged her home. Twice.
Judith Specht, 60, lost her job, her insurance and finally had to foreclose on her Albuquerque home. She and her husband Phillip, 63, pay for all of their medicine out of their own pockets.
"Sometimes I find myself cheating a little bit with my drugs cutting something in half or not taking it at all, not refilling it when I should, so we can take care of other things," Specht said.
Prescription drug spending represents 10 percent of all health care costs, and generic drugs account for about half of all prescriptions. But drug prices, especially for generic drugs — which are supposed to save money — can vary wildly from one pharmacy to the next. The 80 million uninsured or under-insured Americans will have to keep an even closer eye on generic costs or pay the price.
In Albuquerque, for example, if you filled a prescription for the generic version of the heartburn drug Pepsid at the local Sam's Club, it would cost you $13. But if you filled the same prescription at Walgreen's, just a few hundred yards away, it would cost $87.
The huge price differences for generic drugs have been coming to light in New Mexico ever since state Attorney General Patricia Madrid began a new program. Interns in her office randomly survey drug stores for prices of some common prescriptions.
"Huge price differences, especially in the prices of generic drugs," said one intern, Justin Woolf, who was working on the project. He found one store selling generic Prozac for $15.72, and another charging $54.99 for the same quantity.
It's not just happening in New Mexico. Local ABC stations across the nation are finding similarly wide discrepancies in the prices of some generic drugs.
In Detroit, WXYZ found that same generic heartburn drug selling for $12 at one pharmacy was selling for $136 at another. In Tampa, Fla., WFTS priced a generic hypertension drug selling for $10.97 at one pharmacy, then found it selling for triple that price elsewhere. And in Phoenix, KNXV discovered a generic antidepressant for $14 at one pharmacy and more than $267 at another.
Drug Rep Says Not Price Gouging
Craig Fuller runs a trade group representing Walgreens, Sam's Club and other major drug store chains, an industry that makes billions in profits every year. He says that the different price tags are a result of "price variation," not price gouging.
"You cannot accuse an industry or its individual members of being greedy when the profit margin is 2 percent," Fuller said. He blames the price variations partly on low profits on brand-name drugs. Stores can't make enough money on those, so some of them are forced to boost the price of generic drugs.
The profit margins on generic drugs may be larger, but the overall prices are still cheaper than the alternative. On average, brand name drugs cost $82, while generic drugs cost an average of $32.
Madrid is attacking drug costs by comparing prescription drug prices at pharmacies around the state, then posting those comparisons on the Internet, and making them available through a toll-free hotline.
"I think that the consumers, when they get their list of drugs and start doing genuine shopping around, that they're also going to be very surprised at how much money they can save," Madrid said.