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Creating Waves of Awareness

Dr Sarfaraz brings to your attention the actual costs of pharmaceutical drugs and the way they are priced and sold to the public.

Investigative reporting from 2003 brought all this into the public eye.

What Costco does is use the cheap drugs as a 'lost leader.'

That means they get people to join their club and purchase all other products when they come into the store for these drugs.

The pharmacies and other stores selling the drugs with the mark-up are using the price to pay their employees, help run the store and make a profit.

The question: Is it ethical to make sick people pay these prices, especially when they are least able to afford these mark ups? There are figures stating that the families that go bankrupt today are due to medical disabilities in breadwinners.


Prescription Drug Pricing Update
This is the only way to reach all these articles because the news channel has blocked anyone from linking to their website. What do you think of that?


Steve Wilson Exposes Huge Prescription Drug Price Markups
By Steve Wilson Web produced by Seth Myers February 5, 2004

Generic drugs are just as safe and effective as their brand-name counterparts but they cost only a fraction as much. That is because companies that produce the generic versions simply copy the formula developed by the drug’s inventor years before.

While your drugstore charges you less for a generic drug than a brand name version, that price difference is nothing compared to the markup most druggists place on the generics. Your pharmacy most likely paid a wholesale price of only pennies for that generic medicine. They then charge you a markup of 3,000%, 4,000%, even 5,000% or more, pocketing most of your savings.

Action News blew the whistle right here 18 months ago on this practice that has been a secret in the retail pharmacy business far and wide for a long, long time. Who’s paying sky-high prices? People who can least afford to get ripped off—the elderly, the unemployed, and everybody who has to pay for their prescription medicine out of their own pocket.

It’s an eye-opening revelation our chief investigative reporter Steve Wilson broke first right here on Action News months ago, evidence that drug stores far and wide have been quietly pocketing the lion’s share of the savings when you buy generic drugs to save money over the high-priced brand names. Now, Steve has the results of an expanded investigation into the facts your druggist has been keeping secret. These so-called "generic" drugs are just as safe and effective as the advertised brands, but they cost less. That’s because about 10 years after a new drug goes on the market, its patent expires and other drugmakers can simply copy it for pennies on the dollar. But here’s the problem: you buy the generics to save money, only in most cases, your druggist is pocketing most of the savings. Let’s take the generic version of the popular anti-depressant Prozac. It’s called Fluoxetine and when we broke this story 18 months ago, some drugstores were selling a one-month supply for as high as $92, yet customers were happy to be saving $30 or so over what they’d have to pay for the brand-name Prozac—happy until Action News was first to expose what that $92 generic prescription actually cost the druggists. Wilson to Gregory Papp/Heritage Sav-Mor Drugs: When I look at Fluoxetine... Papp: That’s a toughie. Wilson: ...the generic version of Prozac...
Papp: That’s a toughie.

Wilson: It’s a toughie because you pay $2.16 and you sell it for $92 dollars!

Papp: Yeah.

Honest pharmacists like Gregory Papp admitted they and their colleagues and competitors all across Metro Detroit and beyond were quietly pocketing huge profit margins of 3 and 4 and 5 thousand per cent on generic Prozac and a host of other generics, too.

Wilson to Papp: Why is that right?

Papp: Well, it’s not right.

Meanwhile the president of the big chain drug store association insisted we had it all wrong.

Craig Fuller, Pres./Natl. Assoc of Chain Drug Stores: Our pharmacies are not making any kind of, anything close to what you’re suggesting. In fact it is 1-2% on the sale of prescription drugs.

The Washington lobbyist also denied it. A druggist and spokesman for Rite Aid here in Metro Detroit also fessed up.

Wilson: They actually cost $2.16, and you see them for $72.99? That’s a, let’s see now, let me do the math there, that’s about, ah, 3,279%?

George Didur/Rite-Aid: Right.

Wilson: What’sa matter George?

Didur: Huh?

Wilson: What are you doing?

Didur (Standing now and taking off microphone): I’m stopping the interview.

At Birmingham Drug, a pharmacist confided that folks in that upscale suburb can afford to pay more. Here we documented the Birmingham crowd was getting soaked on generics with some markups exceeding 4,000%.

But up in small-town Clarkston? At a little neighborhood pharmacy, we found and introduced you to a couple of independent druggists who voiced a very different attitude.

Debra Pullen/Clarkston Pharmacy: For us, we want to be able to help the customer.

Kathy Hannah/Clarkston Pharmacy: And going for the ultimate price isn’t necessarily a daily goal for us.

And what happened almost immediately after our original broadcasts?
Birmingham Drug promised to lower prices and did. The people at the Sav-Mor store promised the same. The big stores? They pretty much shrugged it off.

And as for the owners of the little Clarkston Pharmacy?

Kathy Hannah/Clarkston Pharmacy: Well the results were fantastic! The calls came in from across the state, from Gaylord down to Taylor, people thinking we were the best price in town and we’re very pleased about that.

So, here we are more than a year later now and pharmacies are getting even better deals on many generics as wholesale prices have fallen sharply. Pharmacies can now buy that same one-month supply of this generic Prozac today for just about a dollar.

Kathy Hannah: We thought in order to be a bit more competitive we were going to raise our prices a bit to be even somewhat competitive with the big guys across the street.

With a new-found reputation as Clarkston’s low-cost champions, now they’re expanding more than their store. Generic drug prices that cash customers pay here now have skyrocketed across the board.

Kathy Hannah: But we’re not ripping them off. No we’re not because our prices went up whatever? A couple of dollars?

Wilson: No no no.

Debra: No, I won’t go on camera.

Wilson: You were happy to talk about it when you were the low-price leader. Why not come over here and explain? (she leaves).

Wilson to Kathy: Now we find that the cost has gone down by 50%, the wholesale cost, and your $13.49 has skyrocketed to about $30. Explain that.

Kathy: I have an explanation. My explanation is that my competitors are charging a lot higher price than I was.

Greg Papp/Heritage Sav-Mor: I’m right up to here and if that’s on camera.

Remember honest pharmacist Greg Papp who admitted these kind of markups are just not right? Apparently his Sav-Mor business associates didn’t agree honesty is always the best policy.

Wilson to Papp: You know, the last time we talked about this?

Papp (walking away): The last time I wasn’t in the amount of trouble I’m in now!

Sav-Mor’s president, Richard Grossman, who also ducked us sent a statement saying individual Sav-Mor franchisees set prices and all are very competitive and provide great value.

What’s the issue about these generic drug markups that Mr. Papp and Sav-Mor prefer not to face here?

Wilson to Papp: They’re still as high as they were before, even higher. I thought you indicated you were doing to try and take them down? Prozac, 82? you pay. You’re selling it for 29.99. That’s a 3,557% markup. Pepcid, you’re selling it for $110 for a $3,464% markup. These are the things I want to talk about. Is that why you’re locked in there?

Papp: No comment!

Wilson: Should I wait?

And back in Birmingham where owner Bill Krasnick did lower prices in wake of our reports months ago?

Wilson to Krasnick: Mr. Krasnkick, we’re back. You know what, I’m sorry I cannot talk to you. Your Ternormin is marked up 1,517%. Your Diazyde is marked up 1,271%. Across the board, you’re marking up almost a thousand percent.

Krasnick (picking up the phone): I can’t talk to you.

Wilson: Why can’t you talk to me, Sir?

Can you guess who he’s calling? They showed up minutes later as another pharmacist was explaining there must be some mistake.

Wilson to Neil Bluestone/Birmingham Drug: You’re marking these things up an average of nearly 1,000%. Is that fair? 1,000%?

Neil: It is not fair but it’s got to do. I think those numbers are really not accurate.

Krasnick: Neil, don’t talk to him anymore. It’s total harassment.

Neil: My boss?

Wilson: It’s a total embarrassment?

Krasnick: No, I said harassment.

Wilson: Oh, harassment. Well, Sir, I’m just here to be fair to you.

Now remember, we’re talking about the prices paid by cash customers. If you have insurance, you can bet your insurance company isn’t paying these kinds of prices. Only the elderly, people without a drug benefit, the people who can least afford to be victimized, they’re the ones paying the freight.

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