Prescription Drug Industry is on Drugs


Not a big fan of Walgreens. I don’t like the long walk through the store to get to the only place anyone goes to Walgreens for: the pharmacy. I usually skip the drive-up window unless I can get in the first lane because those bank-like vacuum tubes are even more annoying than the walk through the store.

I go there because it seems like a logical place to get prescriptions. Or is it?

The invisible hand is supposed to keep prices competitive, but it seems the medical industry has put it in a sling. I say this because I recently learned that I was paying way too much at Walgreens. I had recently filled a subscription and of course Walgreens gives you a ton of paperwork with every pick-up – often conveniently stapled to the bag. It had all the info needed for a price quote, so I took it to Costco. Costco said they had no way to give me quote unless I moved the prescription. Isn’t that odd?

It’s very difficult to price shop prescription drugs. If there’s no pricing pressure, how do we know if the price is reasonable? I thought the insurance company more or less ensured a flat price, but why should they care about the expenses that I pay?

Out of curiosity, I took the additional step and moved the prescription. Costco is more convenient though on an absolute basis the typical parking spot is further from the Coscto pharmacy than at Walgreen’s, but Costco wins as it is unlikely to be a dedicated trip.

Surprise! Costco’s price was more than 50% less for the identical prescription. By the way, you don’t have to be a Costco member to use their pharmacy. Both Walgreen’s and Costco have membership programs that offer additional discounts which I have not explored. Those are typically programs that give that a small discount in exchange for selling your information.

As a rule there are major price differences in competitive products and services. We generally rely on competition to ensure a fair deal which is why the lawyers get involved when things break – monopolies, price fixing, etc. Yet it’s surprising how difficult it can be to compare prices in some industries. Do you know if your dentist charges the going rate for a filling? I don’t. Even legal pot is hard to price compare. The Colorado dispensaries have to grow their own, so if you find a strain you like – better hope you like the retailer.

It’s getting more drug like in Telecom too, that is our industry makes it very hard to price shop. It didn’t use to be so hard – comparing prices on T1 was reasonable, but have you ever tried to compare two UCaaS offers? There’s so many variables that it can be very difficult. Same is tru with UC software. Hardware based options were easy, but all these bundled licenses are hard to evaluate. How much is it worth if you weren’t going to buy a specific feature to begin with?

It’s actually even harder for the analysts that try to measure sales (and the reason why I think most market share reports have such limited value). I recommend a trip to the pharmacy before reading one.

Dave Michels