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The Drugstore Merger Game

Drugstore Mergers
SAN FRANCISCO, CA - JULY 09: A pedestrian walks by a Walgreens store on July 9, 2015 in San Francisco, California. Walgreens Boot Alliance Inc. reported better than expected third quarter profits with net earnings of $1.3 billion, or $1.18 per share, compared to $714 million, or $0.74 per share one year ago. (Photo by Justin Sullivan/Getty Images)
Date: January 1, 2016      Publication: Bottom Line Health      Source: Charles B.  Inlander      Print:

The recent announcement that Walgreens, America’s largest drugstore chain, is merging with number-three Rite Aid made headlines across the country. This megadeal follows, by just a few months, number-two drug chain CVS’s purchase of Target’s pharmacy business. These mergers and acquisitions are part of a larger trend that’s transforming the drugstore into a full-service medical provider, where you can see a doctor or nurse…get injections, such as a flu shot…and fill a prescription—all in one visit. There’s no question that these mergers help the owners or shareholders of these companies. But what about you? Here’s how you can benefit… 

• Lower prices…usually. Drugstore chains, such as Walgreens, CVS and Rite Aid, have tremendous buying power and can negotiate lower prices from drug manufacturers and pass them along to you. This generally includes pharmacies at big discount stores, such as Costco, Walmart and Kmart, too. And if you have drug insurance, you can be sure that your insurer has already negotiated the costs of your drugs and will generally get the best prices from the major drugstore chains or a big discount-store pharmacy. So you will likely save money at the larger chain or discount-store pharmacy, which means your out-of-pocket dollar will go further. Remember, however, to always compare prices among the chains and discount-store pharmacies.

 A caveat: For older, lower-cost generic drugs, the big drugstore chains may not always offer the best deal—even with your insurance. For example, a generic thyroid medication I take costs me $7 per month out-of-pocket at Rite Aid under my Part D Medicare drug supplement policy. But Walmart sells the same drug for $4, even if you don’t have insurance. That’s because Walmart, and member clubs like Costco, often sell older generic drugs below wholesale price just to get you in the door. So I buy the drug at Walmart and don’t even use my Medicare Part D insurance. Insider tip: Shop around, especially if you have no or very little drug insurance. And keep this in mind: Urban pharmacies usually charge more than rural ones. One study found a rural North Carolina pharmacy selling a 30-day supply of the generic form of the diabetes drug Actos for $37 compared with a Raleigh pharmacy selling it for $203!

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• Better service from the chainswith an exception. Let’s say you’re having a problem with a drug. Most drugstore chains have 24-hour hotlines (staffed by pharmacists or nurses). Using a major chain also means that your medication records are available no matter what store in the chain you walk into—even in other states. Major chains usually have a larger supply of drugs in stock, so your prescription can be filled more quickly. And because they have such a high volume of business, chains tend to carry less commonly prescribed drugs, preventing a few days of waiting for your order to be filled. Insider tip: Smaller independent pharmacies tend to be better for prescriptions that need to be compounded (prepared by a pharmacist who mixes or adjusts drug ingredients to customize a medication). Many chains send these prescriptions to regional centers, often causing a day or two delay.

So to get the most value for your medical dollar—with round-the-clock services and convenience—large drugstore chains may be your answer.

Source: Charles B. Inlander, a consumer advocate and health-care consultant based in Fogelsville, Pennsylvania. He was the founding president of the nonprofit People’s Medical Society, a consumer advocacy organization credited with key improvements in the quality of US health care in the 1980s and 1990s, and is the author or coauthor of more than 20 consumer-health books.

  • Wayne Blackburn

    Did you know that Walgreens does not support our retired veterans, refusing to accept their government funded drug coverage called TRICARE

    • Tkblane

      This isn’t accurate. Walgreens lost the bid to CVS pharmacy to accept Express scripts. It’s not that they don’t “support our veterans” or active duty (because anyone with a written script can fill it at an authorized pharmacy), it’s that they simply
      lost the bid a few years ago.