Prescription Drug Cost Discrepancies Uncovered

February 17, 2006
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GRAND RAPIDS — A statewide undercover investigation by the Michigan Attorney General Office revealed significant cost differences from pharmacy to pharmacy in Grand Rapids, as well as nine other Michigan communities.

Attorney General Michael Cox announced his office is investigating 17 pharmacies in the state for possible price gouging as a result of the survey.  Spokesman Rusty Hills said the agency was advised not to identify the 17 pharmacies while the investigations are under way. The office would not divulge the Grand Rapids pharmacies that were part of the investigation.

“Price gouging is charging a consumer price that is grossly in excess of the price at which similar properties or services are sold,” Hills explained.

Cox said the results of the survey “provide clear evidence” that prices vary widely among pharmacies throughout Michigan communities. The survey results prompted him to call for creation of a consumer-friendly Web site with prescription drug pricing information provided by the Michigan Department of Community Health.

Also, a total of 26 pharmacies were identified for refusing “in varying degrees” to provide drug pricing information to consumers who asked for it; under Michigan law, a pharmacist must provide the cost information to the consumer before selling the drug. Each of those pharmacies was sent a letter from the Consumer Protection Division reminding them of their obligation to divulge price information, Hills said.

Undercover drug surveyors compared the price of some of the most commonly prescribed drugs in Michigan with information supplied by more than 20 pharmacies in 10 Michigan communities. They contacted the 200 randomly selected pharmacies on three days: Jan. 17, Jan. 31 and Feb. 10.

The agency’s survey tracked the price charged a cash-paying customer without any health insurance for 10 of the 25 most commonly prescribed medications as identified by the Department of Community Health. The data was based on a typical 30-day supply of each medication in its most commonly prescribed dosage.

Data on 20 Grand Rapids areas pharmacies was collected on Jan. 31. According to the agency’s report, on that day a consumer in Grand Rapids needing acetaminophen with codeine would have paid $12.08 in cash for a month’s supply at The Chemist Shoppe on Wealthy Street and $45.29 — or 3.75 times the amount — at the CVS pharmacy on Fuller Avenue. The mean price among pharmacies in this area was $25.67.

What is not noted in the report, however, is that acetaminophen with codeine is available in both branded and generic form. There’s typically a considerable gap in pricing between brands and generics, and if there are multiple manufacturers of the generic, there can also be several different prices on the generic. 

The other nine drugs are currently patent protected brands, thus provide a better means of comparison. A consumer needing a one-month supply of Albuterol for asthma relief would have paid $5.59 in cash to have the prescription filled at Sam’s Club Pharmacy on 28th Street, but would have paid $26.99 in cash — or 4.83 times the price — had the prescription been filled by the Rite Aid pharmacy on Breton Road. The mean price in Grand Rapids was $18.53.

Among other examples: Prices for a 30-day, common dosage and supply of Lexapro varied from a low of $68.36 to a high of $94.99; Norvasc ranged in price from $61.16 to $85.89; Prevacid ranged in price from $131.54 to $173.80; Fosamax-Plus prices ranged from $68.68 to $100.89; Zoloft prices ran from $77.72 to $113.70; and Plavix ranged from $118.50 to $171.99.

Judging by the spread sheet data on all 20 communities, the mean prices for most of the 10 drugs listed were generally a little lower in the Grand Rapids, Lansing, Saginaw and Traverse City areas compared to the Detroit, Livonia, Royal Oak and Sterling Heights areas and the Monroe and St. Joseph/Benton Harbor areas.

A closer look at the drug survey results for Grand Rapids also reveals some price discrepancies among stores within the same chain. While CVS charged the cash-paying customer without insurance $45.29 for acetaminophen with codeine at its Fuller Avenue store, the price for the same medication in the same dosage was $27.89 at the CVS on Lake Drive. Michael DeAngelis of CVS corporate communications said he suspects the price difference reflects the cost of a brand vs. generic. With the exception of that drug, CVS charged the same price at both stores for all other medications on the top 10 list. DeAngelis also noted that there can be price differentials between stores in a chain simply due to local competition.

The Meijer pharmacies on Alpine Avenue and Cascade Road varied slightly in price on three of the 10 medications: There was a $1.64 difference in the price of acetaminophen with codeine; a $2.27 difference in the price of Plavix; and a $1.57 difference in price of Fosamax-Plus.

The only other chain represented in the survey was Walgreens. Walgreens charged cash-paying consumers without insurance the same price for all 10 medications at its locations on Michigan Street NE and Kalamazoo Avenue, the two locations included in the survey.

On Jan. 31, no pharmacy in Grand Rapids stood out as “providing consistently high prices,” according to the state attorney general’s office. The agency did note that Sam’s Club Pharmacy at 4326 28th St. SE provided nine of the 10 lowest drug prices in Grand Rapids.

Rep. Roger Kahn, M.D., a Republican from Saginaw Township, is sponsor of the current Drug Cost Pricing Web Site legislation. He said the Web site will empower all Michigan residents, especially seniors, to save money on prescription drugs and improve their overall health.

As Attorney General Cox put it: “If I can spend $84.99 for Singulair at a pharmacy in my hometown of Livonia but would be expected to pay $117.27 at another pharmacy, I would like to know that before I decide to take my business there.”

Lody Zwarensteyn, president of the nonprofit Alliance for Health said such a Web site would be welcomed and is long overdue.

“You’ve got to get price and quality information out to people,” he said. “What you want is a market with competition, and we really do need market forces to come into play. That’s been the big bugaboo, because getting market forces going in health care is not an easy thing.”

As to the 17 pharmacies now under investigation for price gouging, the attorney general’s spokesman Hills said no store will be closed as a result of gouging allegations, but depending on the facts of the particular case, a pharmacy could face a fine or a “disgorgement of profits” restitution.    

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