Big box pharmacies may offer lowest cash prices on generic drugs

1. In this analysis of nearly all retail pharmacies in the United States, big box pharmacies were found to offer generic drugs at significantly reduced cost compared to other types of pharmacies. Independent pharmacies and small chains were found to sell at the highest cash prices.

2. In the case of brand-name drugs, pharmacy type was correlated with only moderate differences in cash price.

Evidence Rating Level: 3 (Average)

Study Rundown: In recent years, prescription drug spending has far outpaced spending for healthcare services due to expansion of insurance coverage, increases in price, and the advent of several novel pharmacological classes of medicines. Correlated with this upturn in spending is a broadening in pricing across payer types and geographical region. Historical studies in this domain have primarily focused on small samples of drugs or small regions, making it difficult to generalize conclusions. This study sought to present a comprehensive analysis of cash prices of commonly used drugs in the U.S. in order to better inform potential consumers of their options. Findings showed significant variation in pricing of generic medications, with independent and small-chain pharmacies charging roughly three times as much for the same drug compared to big box pharmacies, which offer the best value. Cash pricing of brand-name drugs was found to remain relatively uniform across pharmacy types. This study boasted an large sample size, including nearly all retail pharmacies in the country. Additionally, only stratified results from zip-codes with multiple pharmacy types were reported, which improved the relevance of findings to consumers who have the freedom of selecting a purchase location. Conversely, this decision limited applicability to those who may not have access to multiple pharmacies. One additional limitation of this study was failure to incorporate data on actual transaction value, point-of-sale discounts and price matching into analysis, potentially skewing results toward higher cost. Finally, due to the cross-sectional nature of this study, findings did not necessarily accurately reflect current pricing or offer insight into trends across time.

Click to read the study in Annals of Internal Medicine

Click to read an accompanying editorial in Annals of Internal Medicine

Relevant Reading: Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

In-Depth [cross-sectional study]: This cross-sectional study utilized data from 2015 detailing the cash prices of 16 commonly used brand-name and generic drugs at 68353 unique retail pharmacies across the United States using data from GoodRx.com. Specialty, infusion, compounding, and long-term care pharmacies were excluded from analysis due to inadequate information. Included pharmacies were categorized according to size and number of locations. Chains with >100 stores were categorized as large, those with between 4-100 stores were categorized as small, and those with between 1-3 stores were categorized as independent. Stores within extremely large retailers (≥50,000 sq. ft.) were classified as big box, while those occupying space within a grocery market were classified as grocery. Upon stratification by ZIP code, large chain pharmacies served as a reference to compare relative cash price. Big box and grocery-based pharmacies had relative prices of 0.52 (95% CI, 0.51 to 0.53) and 0.82 (CI, 0.81 to 0.83), respectively, while small chain and independent pharmacies had relative cash prices for generic drugs of 1.51 (CI, 1.45 to 1.56) and 1.61 (CI, 1.58 to 1.64), respectively. For brand-name drugs, cash prices varied by less than 10% across all pharmacy types.

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