I'm retired and therefore somewhat out of the loop as far as Drug
costs (what the Pharmacy buys the drugs for).... BUT generics always
have been difficult to set a Retail price for...

Say I pay 6 dollars for the  Brand Medication  but only pay 2 dollars
for the generic...

Do I apply a straight 40 percent markup on BOTH?
Thus  retail the Brand for 8.40 and the Generic for 2,80

Or do I sell the Generic for 4.40 (my cost + the same dollar profit
That I would have made selling the brand..? 25-30 years ago before
Insurance companies cam into play .. this was a very common pricing
method. .  

I saved the patient almost half (8.40 vs 4.40) yet I did not hurt my
Bottom line one cent..(sure did help the gross profit margin
however)..

Today I would doubt that Costco Buys drugs any cheaper then the other
BIG CHAINS...  what you are seeing is just different methods of
pricing each drug...  

When one considers that Insurance companies are now paying for 75
percent (guess on my part_ of all the Rx's filled and they normally
pay average wholesale price of the drug plus a fixed dollar fee..
normally ranging from 2 bucks to 5 bucks... In the above case that's
fine.

BUT when you get into drugs that "cost" 100 bucks  its extremely hard
to retail that for 105 to an insurance company and still meet payroll
and expenses ... the extra profit gained from selling the Generic
above for 4.40 makes up a lot of the loss from selling to insurance
companies..

The above is compounded by chains marking up  some Generics one way
and other generics by another method....  Given a list of 100 Generic
Drugs I am willing to bet the retail price of those 100 drugs is
pretty darn close from one chain to another...

Just the thoughts of an old retired Pharmacist  ..

Bob G..

This is pure speculation on my part, not having any associations
with the pharmaceutical industry.

I'm wondering if the prices are extraordinarily low because the
generics purchased in huge quantities by companies like Costco
and Walmart are manufactured outside of the US, in places where
manufacturing costs are much less, such as India and China.

http://www.washingtonpost.com/wp-dyn/content/article/2007/06/16/AR2007061601295.html
or
http://preview.tinyurl.com/2eebbu

Any insights?

FurPaw

Why are you surprised? Can't you a buy a small piece
of candy for 10 cents? So why should a drug cost any
more? Both have some ingridients, both are manufactured
using machinery. Why should the ingredient of candy be more
expensive than the ingredient of a drug? Or the method
of manufacture? The cost of the drug is in the research
needed to develop the drug, the testing & paperwork
needed before it gets approved, the costs associated with
lawsuits & the millions of dollars spent in advertising the
drug. Once the drug runs it's course of 10 years or
whatever, then anyone can manufacture a generic
of the drug in the factory for a few cents without all
the extra costs.

In India, you can get a strip of Ambien (10 pills) retail
for a 1.5$, i.e. 15 cents a pill. So considering the profit
margins, I am assuming it can be produced at less than
5 cents a pill. Costco must be importing it from India
or some other country. The Indian drug industry is
very mature. They have has 1000's of top class drug
manufacturing facilities with top quality quality checks.

Your Walgreens & others also import these generics but
sell it a very high margin, knowing that it will be still
cheaper than the non-generic & people will come out
thinking they have saved money. Costco, OTOH,
passes these savings to the customers & also makes
it profits by volume. By the way, one thing most people
don't know is that you don't need Costco Membership
to use their pharmacy.