July 03, 2004 -- Did you ever wonder how much it costs a drug company just for the active raw 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. A significant percentage of drugs sold in the United State contain active ingredients made in other countries. As a part of an independent investigation of how much profit drug companies really make, we recently obtained the actual cost of active ingredients used in some of the most popular drugs sold in America.
The data below speaks for itself.
Generic drugs are usually less expensive than the advertised national branded versions but are they really as good a deal as they seem?
Generally most pharmacies make more profit on generic drugs than they do on branded versions. Branded drugs usually have only a small pharmacy imposed mark-up. The mark-up on a generic can be whatever the pharmacy chooses to charge.
Some of the best prices for generic drugs can often be found by shopping the "discount" and "membership" stores.
Competition has caused many of these chains to offer selected generic drugs for as low as $4 for a month's supply. Common antibiotics are often on these lists. Drugs used to control blood pressure etc; and are designed for continuing long-term use seldom are.
Steve Wilson, an investigative reporter for Channel 7 TV News in Detroit, did a story on generic drug price gouging by pharmacies. He found in his investigation, that some of these generic drugs had been marked up as much as 3,000% or more.
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, Sam's Club and other discount volume stores consistently charged little over their cost for the generic drugs.
One viewer went to a discount store's website, where you can look up any drug, and got its online price. It said that the in-store prices were consistent with the online prices. This person looked up a generic drug they had previously used. The price was $54.99 for 60 pills at CVS. They checked the price at Costco, and could have bought 100 pills for $19.89. For 145 of their pain pills they had paid $72.57. They could have bought 150 at another discount store for $28.08.
Remember too that if you are purchasing drugs under Part D od Medicare that how soon you reach the "doughnut" where you'll have to pay 100% of the costs depends on the amount you AND your insurance plan are jointly paying each time you fill or refill a prescription.
This is yet another reason that it is in your best interest to shop around and find the best deal.