American Independent Business Alliance

New Report Shows Independent Pharmacies Save You Big Money Over Chains

New Report Shows Independent Pharmacies Save You Big Money Over Chains

By Janna Williams and Jeff Milchen

In its May 2018 issue, Consumer Reports magazine published the results of a drug price investigation it undertook to learn who offers the best value for prescription drugs. The Consumers Union (publisher of the magazine) team called more than 150 pharmacies in six metro regions to get cost quotes for five commonly-prescribed drugs.

The result? Independent pharmacies beat major chain drugstores, supermarkets and big box discounters on price — and by a stunning margin. Independents also handily beat the membership warehouse Sam’s Club, and only were edged out by less than two percent by Costco, where customers pay $60 annually for a membership before being able to shop.* Average total cost for the five drugs are shown in the graphic and are individually broken out further below. In every city, the lowest price available for each drug was found at an independent, but some independents had much higher prices, so be sure to compare!

Click image to enlarge. See below for information on online sellers.

Unlike its last (2015) investigation of drug prices, Consumer Reports did not gather service-oriented ratings. They reported then, “at least 90 percent of shoppers at independents rated their pharmacy as Excellent or Very Good in speed & accuracy, courtesy & helpfulness, and pharmacists’ knowledge. No other type of drugstore came close.”

The Consumers Union’s online Pharmacy Guide reports just four percent of independent pharmacy customers complained of long waits for service compared to 21 percent at chain-based outlets. The Guide also notes “Independents are still your best bet for anytime delivery.”

So how can Walmart, CVS, Walgreens, Rite Aid and other chains get away with charging you 500 – 800 percent more than independent competitors? Chain pharmacies often claim “almost nobody pays full price,” but that’s disputed by many sources, including watchdogs, independents, and even Costco, which told Consumer Reports one-third of their prescription drug sales involve no insurance. 

Independents still comprise 36 percent of all retail pharmacies in the U.S. (the other 64 percent includes stand-alone chains, supermarket chains, and big box stores’ pharmacies). After a sharp decline from the years 1980 – 2000, the number of independent pharmacies has been stable in recent years (22,041 as of 2017). With independent pharmacies providing superior speed, service, and pricing, why are chains not shuttering their doors while opportunities expand for community pharmacists?

For one, patients often are prevented from gaining the information needed to make well-informed decisions. Pharmacists sometimes are contractually prohibited by insurance companies or Pharmacy Benefit Managers (PBMs) from telling patients when using insurance will cost them more money through co-payments vs. paying cash!

Lisa Gill, Deputy Editor at Consumer Reports considers such “gag rules” a travesty. “It’s deeply troubling that a pharmacist can be barred from speaking honestly with a patient,” Gill told us. “And such clauses are likely indicative of deeper problems within these PBM agreements harming consumers as well as independent pharmacies.” The National Community Pharmacists Association found 59 percent of survey respondents had experienced such “gag clauses” at least 10 times in the previous month.

A bill recently was introduced in Congress to ban these restrictions, but the PBM corporations that are making big profits while driving up drug costs will be investing heavily to dissuade any action.

PBMs aren’t the only ones standing in the way of lower prescription drug costs. Many health plans (including Medicare) steer people to “preferred” pharmacies, typically meaning a chain with which they’ve negotiated the most profitable arrangement. These almost invariably exclude most community pharmacies — harming customers and local pharmacists alike. With Medicare, this seems to be another case of our own government favoring the largest corporations at the expense of independent businesses.

Getting Drugs Online

Excluding independent pharmacies from preferred lists also can drive consumers toward cheap online drug stores, with negative consequences for customers. “When getting prescriptions by mail order or online, you’re breaking the relationship between the pharmacist and the patient,” says John Norton, Director of Public Relations at the National Community Pharmacists AssociationNorton notes that adherence (patients following the prescribed dosage, frequency, duration, and abstaining from dangerous drug combinations) is greater when people fulfill their prescription at an independent pharmacy. He adds, “if you have side effects and call an online merchant with questions, they’ll do their best, but there’s no substitute for the personal knowledge and bond between a patient and their community pharmacist.”

For those with no urgency and who are willing to forego personal service, Consumer Reports found the lowest prices at HealthWarehouse.com (see chart). Note their shipping terms say “add 3-7 business days of processing time to all orders” on top of shipping times of 2-8 days for their free service. Faster shipping costs more (to $30 for next day service), which exceeds the total cost of all but one drug in the survey. 

*Costco allows people to purchase only prescription drugs without a membership by getting a special pass.

The May 2018 print edition of Consumer Reports features additional coverage.

View window decals & more educational outreach materials here.

Independent business advocates: this survey is simple enough to replicate in your city or state and can be a great news hook to generate positive media coverage while engaging your local pharmacies! Contact us for assistance (free for AMIBA affiliates and business members). Learn more about how to educate people in your area about the benefits of doing business locally: get a free copy of our guide to effective public education campaigns.

 

Related Resources

Find an independent pharmacist near you. 

For those wondering what happened to Walmart’s $4 generic drugs, they were primarily a PR stunt from the beginning.

The Consumers Union suggests asking three questions of your pharmacist before purchasing drugs:
1. Is a generic available for any of my meds?
2. Would a 90-day prescription save me money?
3. Are there any discounts that could lower my price?

For more on the problem of corporate Pharmacy Benefit Managers like CVS/Caremark, we recommend this 2017 article: The Hidden Monopolies That Raise Drug PricesThe NCPA and Truth RX also address this issue in-depth.

See our Good News Page for further examples of how independent businesses are outperforming corporate giants and chains in banking, appliances, electronics, brewing and more.

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