High Prices 3,000% markup

Bob Spare

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Subject: FW: Fw: RX Prices]

Read to the end!

WalMart announced it is starting a new policy where all generic drugs will be sold for $4.00 per prescription.

COSTCO! read this...


Let's hear it for Costco!! (This is just mind-boggling!) Make sure you read all the way past the list of the drugs. The woman that signed below is a Budget Analyst out of federal Washington , DC offices.

Did you ever wonder how much it costs a drug company for the active ingredient 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. As we have revealed in past issues of Life Extension, a significant percentage of drugs sold in the United States contain active ingredients made in other countries. In our independent investigation of how much profit drug companies really make, we obtained the actual price of active ingredients used in some of the most popular drugs sold in America

The data below speaks for itself.

Celebrex: 100 mg
Consumer price (100 tablets): $130.27
Cost of general active ingredients: $ 0.60
Percent markup: 21,712%

Claritin: 1 0 mg
Consumer Price (100 tablets): $215.17
Cost of general active ingredients: $0.71
Percent markup: 30,306%

Keflex: 250 mg
Consumer Price (100 tablets): $157.39
Cost of general active ingredients: $1.88
Percent markup: 8,372%

Lipitor: 20 mg
Consumer Price (100 tablets): $272.37
Cost of general active ingredients: $5.80
Percent markup: 4,696%

Norvasc: < /I>10 mg Cost of general active ingredients: $0.14
Percent markup: 134,493%

Paxil: 20 mg
Consumer price (100 tablets): $220.27
Cost of general active ingredients: $7.60
Percent markup: 2,898%


Prevacid: 30 mg
Consumer price (100 tablets): $44.77
Cost of general active ingredients: $1.01
Percent markup: 34,136%

Prilosec: 20 mg
Consumer price (100 tablets): $360.97
Cost of general active ingredients $0.52
Percent markup: 69,417%

Prozac: 20 mg
Consumer price (100 tablets) : $247.47
Cost of general active ingredients: $0.11
Percent markup: 224,973%

Tenormin: 50 mg
Consumer price (100 tablets): $104.47
Cost of general active ingredients: $0.13
Percent markup: 80,362%

Vasotec: 10 mg
Consumer price (100 tablets): $102.37
Cost of general active ingredients: $0.20
Percent markup: 51,185%

Xanax: 1 mg
Consumer price (100 tablets) : $136.79
Cost of general active ingredients: $0.024
Percent markup: 569,958%

Zestril: 20 mg
Consumer price (100 tablets) $89.89
Cost of general active ingredients $3.20
Percent markup: 2,809

Zithromax: 600 mg
Consumer price (100 tablets): $1,482.19
Cost of general active ingredients: $18.78
Percent markup: 7,892%

Zocor: /B 40 mg
Consumer price (100 tablets): $350.27
Cost of general active ingredients: $8.63
Percent markup: 4,059%


Zoloft: 50 mg

Consumer price: $206.87
Cost of general active ingredients: $1.75
Percent markup: 11,821%

Since the cost of prescription drugs is so outrageous, I thought everyone should know about this.

Please read the following and pass it on It pays to shop around. This helps to solve the mystery as to why they can afford to put a Walgreen's on every corner On Monday night, Steve Wilson, an investigative reporter for Channel 7News in Detroit , did a story on generic drug price gouging by pharmacies.

He found in his investigation, that some of these generic drugs were marked up as much as 3,000% or more. Yes, that's not a typo.....three thousand percent!

So often, we blame the drug companies for the high cost of drugs, and usually rightfully so. But in this case, the fault clearly lies with the pharmacies themselves.

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 consistently charged little over their cost for the generic drugs.


I (not me) went to the Costco site, where you can look up any drug, and get its online price. It says that the in-store prices are consistent with the online prices. I was appalled. Just to give you one exa mple from my own experience, I had to use the drug, Compazine, which helps prevent nausea in chemo patients.

I (not me) used the generic equivalent, which cost $54.99 for 60 pills at CVS. I checked the price at Costco, and I could have bought 100 pills for $19.89. For 145 of my pain pills, I paid $72.57. I could have got 150 at Costco for $28.08.

I (not me)would like to mention, that although Costco is a "membership" type store, you do NOT have to be a member to buy prescriptions there, as it is a federally regulated substance. You just tell them at the door that you wish to use the pharmacy, and they will let you in (this is true)

I (not me) went there this past Thursday and asked them. I am asking each of you to please help me by copying this letter, and passing it into your own e-mail, and send it to everyone you know with an e-mail address.


Sharon L. Davis
Budget Analyst
U.S Department of Commerce
Room 6839
Office Ph: 202-482-4458
Office Fax: 202-482-5480
E-mail Address: sdavis@doc.gov
 
You forgot to mention just one itsy bitsy thing. What do the TAXES that are charged to the Drug companies, Pharmacies and any one else in the supply chain do to the price of the drugs.

You say drugs aren't taxed. :rofl: :rofl:

The government taxes the raw materials, the equipment to produce, the staff to produce, the gas to transport, the pill bottles etc. :eek: :eek:

And don't get me started on the amount of a gallon of gas is TAX.
 
My wife is a pharmacist and could give you about twenty counter-arguments to what you posted. The facts, as stated, may be correct but that is not the whole story. The independant store where she works part-time often is paid only $1.00 per script on what may have cost him more. In fact, that is not unusual for even Wal-Mart (my wife retired from there). And, they may have to wait six months to get that buck from Medicare, sometimes they never get it. As for the companies, the inventors spend huge amounts of money on research and development. Granted, they also spend huge amounts of money on advertising and promotion. I have eaten many a fine dinner, courtesy of the drug companies, listening to a pitch by a company doctor. The big pharmacies do make good profits but it comes from volume and some of the less common drugs that are priced higher than the more often prescribed generics. That said, I agree, buying stocks in the drug companies is a good investment. But do watch out for bubbles bursting with Costco, Walgreen and Wal-Mart.
 
I am in NO WAY in favor of the high prices that the pharmaceutical companies charge for their prescription drugs but, the costs that are listed above are skewed a little. What is missing is the millions and hundreds of millions of dollars that goes into the research and developement of these drugs.

Plus, there are many other drugs that go through many "rounds" of R & D and testing and then it's found out that there is something wrong with the drug, it won't pass the FDA and it has to be scrapped. Then, a different formula must be found to try and treat a given disease or aliment and the R & D and testing starts all over again. These costs are borne by the drug companies and are factored into the prices of their drugs that DO pass all of the testing and the FDA and finally get to us.

The "generic" drugs are drugs that once had high costs as well. But their patent ran out and now can be manufactured by other companies and sold for much less. These other companies did not have to pay for any R & D or testing of the drugs. It was done for them by the original drug manufacturer.

Again let me state, I feel that the drug companies are making butt loads of money, but that is our capitalistic society at work and we can agree or disagree with it. But let's not be silly and blind and just look at the cost of the active ingredients and not also look at the costs of bringing the drugs to us.

To use an analgoy related to woodworking, let's say that Mr. Jones inherited 5000 acres of prime forest land with great oak, maple, and walnut trees on it. He decides to design a piece of furniture and spends countless hours designing and testing the design for any and all possible flaws that may be hidden. This may take many years, many board feet of material and lots and lots of costs like electricity, heat, AC, wear and tear on his tools, food and shelter for him and his family while there is no money being made by production, etc. He finally hits upon a design that works and he starts production. What are his costs? Free?...because he inherited the land and the trees? No, ALL of his design and testing time as well as all of his manufacturing costs are factored in (if he is a good businessman). This is to say nothing of the profit that a good businessman should factor into the price of his goods. Now this is where some argument could be made, if some thought that he was adding on too much profit. But that is a different point of argument.

The point of the first part of the original post was to say that it only cost a drug company 60 cents or so to make a drug and then they charge $60 (or whatever) for it. To argue and say that the cost to make the drug is only the cost of the active ingredients would be like arguing with the woodworker guy above and saying that his costs are very tiny because he got the wood free. That argument is silly and even a little stupid and childish.

The price that pharmacies/drugstores charge for the meds that they dispense is a whole different matter. Again, in our capitalistic society, we have the choice of shopping wherever we want. If the price is too high at one store, look for the product at another and compare. If we are too lazy and don't shop around then we have to blame ourselves as well.

JMO


BTW, I am not affiliated in ANY way with anyone or any company that deals with pharmaceuticals. I'm just a guy trying to make a living with his hands. But I have looked into this subject, among many others, and while I'm not a fan of the drug companies, I do understand what their costs are.
 
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While the advertising budget spent just on the daily news programs around the country could probably afford a nice retirement for every registered forum member, there’s a lot more (as Mark aptly points out) than simple ingredients involved.
 
I was going to ignore this because the points have been well made by Mark but the quite breathtaking ovesimplification of this document has been troubling me all morning and I hope that this response will get it out of my head.

I make a product. The "active ingredient" (wood) of that product accounts for between 10 & 20% of its retail price. If you take the logic of this statement that means that my profit margin is between 400% and 900%. I wish! And my R&D cost is as close to nil as makes no difference. My regulatory compliance costs are as close to nil as makes no difference. My liability insurance costs are almost certainly tiny in comparison to the insurance costs of anybody who is making any product claiming to have medicinal qualities.

I have no interest in any drug company neither do I (thankfully) have any need for prescription drugs (at the moment). I do understand a little bit about economics. Drug companies operate in an economy and need to make economic returns. If we want them to continue to develop new treatments which are effective or more effective then they need to achieve real returns on the capital that they employ and the drugs that do get to market need to pay for the ones that don't.

I have no idea who S Davis is or what her relationship with Costco is or is not but this missive appears to present a completely unrealistic view of the way the world works and needs to work to be successful.
 
I printed out and showed the original post to my wife. (BTW, I remember this made the rounds as an e-mail some years ago.) She read it and found numerous errors. Including one of the very first statements. "all" of the generics sold by Wal-Mart are not subject to their special pricing. Only some of the generics they sell get that treatment. They have a list of those. The rest are sold at regular prices. Seeing so many errors she discredited the entire document. And, believe me, she is no fan of Wal-Mart or the drug companies but believes in accuracy. She also said that the big mark-up is from the companies to the stores. The stores do not make big profit margins. And, many times, the wait for payment or approval for payment by the insurance companies can eat up what small margin may be in the selling price. Pharmacists have been turned from being protectors of the public health into agents of Medicare and the insurance companies. With less paper work and (considerable) time spent on the telephone getting authorizations, the pharmacies could operate with fewer employees, both pharms. and clerks and reduce costs and prices.
 
I think I can understand why some drug companies charge so much as they need to recapture invested R&D monies.

I don't understand why the same drugs cost so much more in the US than in Canada? Seems the cost should be the same everywhere?:dunno:
 
...I don't understand why the same drugs cost so much more in the US than in Canada? Seems the cost should be the same everywhere?:dunno...:

I don't know either Ken but one thought that springs to mind is that there may be quite different liability risk profiles between the two countries?? Maybe regulatory costs are different?? I used to work with a company that supplied equipment to medicine manufacturers and the costs of FDA compliance were a significant factor in their business.
 
Ken, Ian, you are both partially right. In Canada, the Government negotiates purchases at discount prices based on (very large) quantities. With most of the medical care up there socialized, there is no advantage for the drug companies to advertise and promote. In the U.S. a big part of their budget is spent there. It seems like a cockamamie system and is a hard (expensive) pill for Americans to swallow or understand. BTW, not all "Canadian" companies you see advertising low cost drugs are Canadian. Many are in other countries and don't even have a Canadian presence. The drugs you get from them may be fakes made under low, or no, standards or controls and can be dangerous. Often these fake drugs will come in counterfeit packages that can't be distinguished from the real thing.
 
I'll jump in here and say one thing, do you want new innovative, drugs, ones that work and have less side effects, ones that cure stuff we cannot cure now?

Then the drug companies have to keep making a lot of money, or the investors will take their money and invest it in other industries.

A buddy of mine works for a LARGE international drug company, he told me that the number of new drugs that are developed and brought to market outside of the USA is VERY small, and even then, when a new drug is "Invented", if you will, outside of the US, they will have had a lot of help from US based industry, as the US of A is THE place to develop new drugs.

Want to see all of that end, want to stop the clock on almost all new drugs? Demand a Wallmart/Costco pricing on all drugs.

My Mom recently had an [SIZE=-1]aneurysm[/SIZE], I understand that she was give a fairly new drug within 3 hours of the bleed, this is most likely why she is still with us, ten years ago, you just waited, hoped and prayed, now they have this new drug that is working wonders, how much did it cost? A heck of a lot less than my Mom's life, to me at least. :thumb:

I hope all the drug companies make LOTS of money! :wave:
 
Stu said, "Then the drug companies have to keep making a lot of money, or the investors will take their money and invest it in other industries."

Well stated, Stu. It is an investment generated economy. I'd probably be dead or nearly so if it weren't for some 'miracle' hypertension medications. The old stand-bys just don't work for me. The newer ones I'm on now, do. And, I'm alive and happy to be so.
 
Competition will produce the lowest price, and the best way to achieve competition would be for retailers to post the prices of drugs on their web site (like Costco does). That way, customers could shop for the lowest prices for the drugs they need, and the retailers will compete to offer the lowest prices.

In the medical field, drug prices are one place where competition works, and it's because patients pay a lot of the price for drugs from their own pocket. Even the Medicare Part D plan has the donut hole where patients pay all of the cost. The same is not true of medical services where all the cost is covered if you use a participating physician. In that case, there's no incentive for people to seek the lowest price, or to limit their utilization.

There's a lot of talk about "health care reform" but that reform has to include incentives for people to limit their utilization. I don't know how to do that in a fair manner but I'll be watching the debates about health care reform to see what's proposed.

Mike
 
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