Page 20
February 2009
The AC Phoenix
$4 Generics, Are They Worth The Additional Costs?
liSHlis'-*
:
The offer sounds
almost too good to
be true! As a phar
macist, I was the
first to scratch my
head and say "How
can they afford to
do it?” In terms of
overhead costs in
volved in filling a
prescription, I’ve
read the studies and
run the numbers
myself, it costs
about $10 put a single pill in a bottle. Overhead costs involve rent, salaries, bot
tles, labels etc. So how are those big box stores able to sell a 30 day supply of
medication for less than what is cost to dispense it? The answer is simple, cost
shifting.
From a marketing perspective, I will give them credit it is a stroke of genius. In
today’s economy, everyone is looking for ways to save a buck or two. My dad
used to drive an extra 10 miles just save a penny on a gallon of gasoline. Then
he ran the numbers and figured out he was being played for a sucker. His total
gas bill was higher, even though his price per gallon was lower. The idea of $4
generic drugs is very similar to a convenience store offering gas for $1.50 per
gallon, the gas station picks up a bunch of new customers, and their existing
customers get a great deal. What you don’t know is that every item in the con
venience store is now much higher than they were before the “deal,” in order to
make up the difference in the price of gas. The ultimate goal being to increase
store profits to a level higher than before the offer was run.
In this case if you were already on a $4 drug, and not on any other medicine,
you “won”. If you don’t mind waiting in the long lines that are now there from
all the increased volume as a result of the “deal”. However, if you are taking
medicine other than your $4 drug, you better do some price shopping. I recently
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Call:336.72?,11I1
Fax Resume to 336.723.1606
Sales and Marketing Positions ftvailable
called a couple of “highway comer pharmacies” that offer discount generic plans
as well as a couple of “superstores” and here is what I found. For 30 pills of a
generic version of Zofran (ondansetron) used for nausea, the price at 3 different
comer big box and superstore pharmacies ranged from $121.32 to $674.99 for
the exact same medication. My retail price is $45.00, and the price 1 pay from
my wholesaler to me is $25. This is not a shameless plug for Marley Drug.
Rather, it is a wake up call for all consumers that they need to be aware of the
huge variability in drug prices, and that even the “superstores” are in business to
make money. Don’t believe the spin that their savings from bulk purchasing
power is passed on to you. In the interest of full disclosure, Marley Drug has a
$90 day plan for $18. This allows us to cover our overhead, and be competitive.
I have made no cost shifting of any other item, prescription or over the counter
in my store as a result of this plan.
Now, it is easy to see how a “superstore” can give away $4 generics when you
are making that kind of mark-up on products not on the $4 generic list. Amaz
ingly, it is not just consumers that are getting suckered like my dad on cheap
gas. Major employers are getting bad advice from their consultants encouraging
them to implement “superstore” drug benefit plans. While it is understandable
how the consumer can get swept up in the moment of an apparent deal that looks
to good to be true, consultants and our elected officials can and should be ex
pected to know better. The city of Lexington has already signed on to such a
plan, for the sake of the taxpayers, including you newly annexed folks, you bet
ter hope every employee only takes medicine that is “on the list” or the cities
budget folks will be in for one heck of a surprise.
As a business owner, the economic mess we are in is unlike anything I have ever
seen. I have customers and friends losing jobs left and right. Money for basic
necessities is become scarce for people who have never experienced something
like this. However, it is in times like this that PT Barnum’s now famous quote
“There is a sucker bom every minute” rings true. Even big companies are get
ting desperate trying to find new and creative ways to get you in the store and
spend your money. If you are just on $4 drugs, and you don’t mind the long lines
then I say take the deal and run with it. Personally, my health and my time as a
consumer are worth more than that.
Written by Dave Marley
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TE Johnson & Sons
Realtor*?
200 W. 3rci St
722-6133