For the over 46 million American citizens who lack health insurance, or the many seniors who reach the Medicare "donut," the cost of out-of-pocket prescriptions can be crushing. And yet Freakonomics co-author Stephen J. Dubner says the price of Prozac, as an example, can vary from a high of $117 down to $12 per month at Costco.
Here are the results of the informal drug price survey in Houston for 90 tabs of Prozac:
Walgreens: $117
Eckerd: $115
CVS: $115
Sam’s Club: $15
Costco: $12
The Wall Street Journal, via the same Freakonomics blog, cites instances where the price of a Zocor generic can range from $108.99 down to $6.97. How could someone consistently pay the much higher prices for these generics and others? Dubner asked the physician who conducted the original survey:
His answer: if a retiree is used to filling his prescriptions at Walgreens, that’s where he fills his prescriptions — and he assumes that the price of a generic drug (or, perhaps, any drug) is pretty much the same at any pharmacy. Talk about information asymmetry; talk about price discrimination.
On the subject of price discrimination, are insurance companies paying these same wild variances in prices? Or does Walgreens, for example, give insurance companies a substantial discount over the rate paid by out-of-pocket customers? I know hospitals have been slapped for charging uninsured customers at a higher rate than those who have insurance. If this is happening with prescription drugs, obviously we need some legislative or judicial cures.
But ultimately, I think this does come down to information asymmetry, which is a much tougher subject. While well informed, and typically higher income patrons of Costco receive bargain prices, less informed, lower income patients have to chop their pills to make them last. Familiar story: so-called "smart" buyers usually pay less. But in this case, it can be a matter of life or death. So is the solution just to get everyone to buy from Costco? Price controls? Mandatory public posting of all prescription prices? Or...?
(And by the way, this is just one more reason to Buy Blue. And when you patronize Costco, you get to deal with valued employees who receive above average wages and health insurance.)