Economic theory says that for commodities, there should be one market price. For instance, there is one worldwide price for oil, metals also have a one worldwide price. While there is significant heterogeneity between different types of medical treatments, one would expect that the price of pharmaceuticals would be the same or very similar across different pharmacies. Of course, drugs from different companies, or brand name versus generic drugs would likely have different prices, but economic theory suggests that pharmacies selling drugs with the exact same chemical formulation from the exact same company should sell these drugs at approximately the same price.
This is not what a phone survey by change:healthcare found. According to VentureBeat, the survey examined six prescription drugs: “Copaxone, an injectable multiple-sclerosis drug; the antidepressant Zoloft; the fibromyalgia drug Lyrica; Lipitor, a statin that lowers cholesterol; the sleep aid Ambien; and the allergy/asthma drug Singulair. The survey turned up some surprisingly wide disparities among the pharmacy chains, such as the fact that a Lyrica prescription costs more than twice as much at Rite-Aid as it does at Walgreens. No single pharmacy was consistently the cheapest, and prices could vary considerably even at different branches of the same chain. Kroger, for instance, charged twice as much for Singulair in one Nashville neighborhood (Green Hills/Belle Meade) as it did in another (Franklin).”
How large are these differences? The change:helathcare site states:
“A person buying at the highest priced chain in the survey would have paid about $485 (20%) more than the person buying at the lowest. In fact, the cost of a prescription can vary as much as 20 to 40 percent between major pharmacy chains within walking distance of one another, and as much as 50 percent from one part of a city to another.”
While VentureBeat wisely notes that change:healthcare has “a vested interest in building demand for services that will help individuals compare healthcare costs,” it is still interesting such large price discrepancies could exist.