Pharmacy Price Variation

Posted by & filed under CGR Staff, Rochester Business Journal.

Need drugs? The legal kind, I mean? I think you’ll agree that there is no shortage of sources. I did a quick check of the phone book and found ten places to buy prescription drugs within a two mile radius of my house (3 Eckerds and 2 Wegmans plus Tops, Rite Aid, CVS, Kmart, Walmart and Medicine Shoppe). And there are more planned—Target & Walgreens will be in the radius by the end of the year.

Doesn’t this seem rather odd? Let’s put aside the places that do drugs as part of a one-stop-shopping model, such as the grocery and department store chains. It is the stand-alone pharmacies that puzzle me. How can Eckerds make money with three stores in my backyard? I can’t remember a time when these places were particularly busy. Waiting at the check-out is a rare event. Offhand, this doesn’t look like an efficient model. So either they are ready to go bankrupt (Ah, that must be why Walgreens is entering our market—they want to share in the losses!) or the margin between the price they pay and the price we pay is pretty rich.
Read more »