Why does Walgreens charge 1,237% more than Costco?

An investigation by Tegna-owned TV stations across the country uncovered lawmakers accepting millions in campaign contributions from drug companies, while Congress helped Big Pharma make a lot of money in return.

PHOENIX — Corinne was reeling when she left the doctor’s office and made a beeline to her neighborhood Walgreens.

Ken, her husband of 38 years, had just been diagnosed with Alzheimer’s. She had watched, stunned and near tears, as he couldn’t answer a series of questions, couldn’t even tell the neurologist that it was fall.

A blow like that? It’s almost physical, like a freight train slamming into your gut as suddenly you realize that life will never again be the same.

“We left the office with a prescription for Donepezil,” she told me. “I dropped it off at Walgreens and came on home with our daughter and Ken. A couple of hours later, she and I went to pick it up. This was when I found the price to be $198.80. I was floored, but my overwhelming thought was ‘Get that medicine into Ken ASAP.’ ”

She paid cash, as Ken is on Medicare but doesn’t have prescription drug coverage. A few days later, when some of the fog of emotion had lifted, Corinne started questioning how 30 tablets — a month’s supply — could cost $198.80. So she started checking around.

And found the same medication at Costco for $14.87.

So I guess you’re wondering how Walgreens could charge $198.80 for pills that cost just $14.87 at Costco. How a reputable pharmacy could gouge its customers to the tune of 1,237%.

Corrine wondered as well. She wrote Walgreens but never got an explanation — just a call offering a full refund.

Why do they charge so much? It's a secret

Apparently, pricing strategy for prescription drugs is a state secret akin to the nation’s nuclear codes. Neither Costco nor Walgreens would discuss it with me.

“It’s important to note that more than 97% of our patients do not pay cash prices,” Walgreens spokesman Scott Goldberg told me, via email. “They purchase their prescriptions using some form of prescription insurance coverage.”

So, reading between the lines, the people who have insurance get a break on the cost and the people who don’t, the ones who often can’t afford insurance, are gouged?

Apparently, it works like this. Most customers of the major chain drug stores have insurance, and insurance companies negotiate prices that are discounted from a store’s list price. Therefore, the chains attach the list price to a rocket and launch it skyward — and to heck with the poor schlubs like Corrine, who pay out of pocket.

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Which doesn’t explain why Costco’s prices remain earthbound. And mum’s the word over at Costco HQ:

“Costco Pharmacy prices pharmaceuticals based on the same philosophy that we apply to the other merchandise we sell in the warehouse which is — ‘To continually provide our members with quality goods and services at the lowest possible prices.’ However we typically do not share the details behind this philosophy or business model.”

The moral of this story: It’s worth shopping around for prescription drugs. Because that neighborhood drug store that bills itself as “at the corner of happy and healthy?”

Turns out it’s on a street called highway robbery.

USA TODAY


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