Prescription Drug Pricing in Independent and Chain Drugstores: An Examination of the Data 9781512818307

Table of contents :
Foreword
Table of Contents
List of Tables
I. Drugstores And The Public Regulation Dilemma
II. The Drugstore Industry
III. Prescription Drug Prices In Chain And Independent Drugstores
IV. Price Comparison For Nonprescription Drug Products
V. Summary And Conclusion
Appendices
Index

Citation preview

INDUSTRIAL

RESEARCH

UNIT

DRUG I N D U S T R Y

INDUSTRY

STUDIES

SERIES—NO. 4

PRESCRIPTION DRUG PRICING IN INDEPENDENT AND CHAIN DRUGSTORES AN EXAMINATION

OF THE DATA

by

JONATHAN P .

NORTHRUP

Research Assistant Industrial

Research Unit

U N I V E R S I T Y OF P E N N S Y L V A N I A The Wharton School Industrial, Research Unit

Drug Industry Studies The Wharton's School's Industrial Research Unit has been noted f o r its "relevant research" since its founding in 1921. The I R U is now the largest academic publisher of manpower and collective bargaining studies. Major Industrial Research Unit Studies and monographs in special series, such a3 the Racial Policies of American Industry, the Labor Relations and Public Policy Series, Manpower and Human Resources Studies, and Industry Studies, are published as research reports are completed. Recent Industrial Research Unit Studies (Order f r o m Industrial Research Unit, Vance Hall/CS, The Wharton School, University of Pennsylvania, Philadelphia 19174) Market

Restraints

in the Retail Drug Industry,

M a j o r Study No. 43. 1967. $10.00

Industry,

The Racial

The

Negro in the Drug Manufacturing American Industry Series No. 21.

The

Negro in the Drugstore Industry, The Racial Policies Industry Series No. 24. ( A l l Three Above by F. Marion Fletcher)

Policies of 1970. $5.95

of American 1971. $5.95

Prescription Drug Pricing in Independent and Chain Drugstores: An Examination of The Data, by Jonathan P. Northrup, Drug Industry Series No. 4. 1975. $5.95

Copyright © 1975 by the Trustees of the University of Pennsylvania Library of Congress Catalog Card Number 75-24790 MANUFACTURED I N T H E U N I T E D STATES OF A M E R I C A

ISBN:

0-8122-7704-x

Foreword From its inception in 1921, the Wharton School's Industrial Research Unit has directed some of its "relevant research" into problems of particular industries, as well as maintaining its primary research thrust in the labor market and collective bargaining fields. Thus, production, earnings, costs, productivity, inventory, equipment, and pricing studies were made between 1921 and 1960 in such industries as foundries, machine tools, bituminous coal, hosiery, textiles, and upholstery. More recently, the Unit has examined various problems in the carpet and drug industries as part of its "Industry Studies". This study, Prescription Drug Pricing in Independent and Chain Drugstores: An Examination of the Data, the fourth Industrial Research Unit study dealing with aspects of drug manufacture or distribution, examines the data now extant and finds that such data demonstrate that chain drugstores commonly price prescriptions substantially below what independent drugstores charge. The reasons for these price differentials are also briefly examined in the study, as are price differentials in nonprescription drug items. The implications, of course, for public policy are clear: legislation, common in many states, and a subject of the Industrial Research Unit's previous study, Market Restraints in the Retail Drug Industry, which limits the capacity of chain stores to operate, does so at the risk of increasing prices to the consumer. This study grew out of the interest of the National Association of Chain Drug Stores in determining what data were available concerning pricing and what these data revealed. NACDS therefore underwrote the costs with a small grant and with the clear understanding that the Unit's only obligation to NACDS would be to complete the study and to make it public. No attempt has been made by NACDS to interfere with the research nor with the administration, the methodology, the procedures, nor the conclusions of the study. The responsibility for the views expressed and the conclusions reached are vested in the author, and are not to be attributed to the grantor of the funds nor to the University of Pennsylvania. iii

Foreword

iv

The author of this study, Jonathan P. Northrup, is a Research Assistant in the Industrial Research Unit and a candidate for the MBA degree in the Graduate Division of the Wharton School with a combined major in finance and accounting. He received his undergraduate degree at Northwestern University where he majored in economics. He is the twenty-sixth author of an Industrial Research Unit publication who completed a monograph while a student. The author wishes to thank Dr. Donald F. Morrison, Professor of Statistics and Operations Research at the Wharton School, for advice on statistical methodology; Miss Elsa Klemp for assistance in compiling and checking data; Miss Mary Booker and Mrs. Jean McGrath for typing the manuscript; and Mrs. Margaret E. Doyle, Office Manager of the Unit, for handling various administrative details. Statistical and data processing computations and programming were done by the author. Mr. Michael McGrath edited the manuscript and compiled the index. The data listed as in the possession of the Industrial Research Unit have been carefully authenticated and are maintained in the Unit's library. R. N O R T H R U P , Director Industrial Research Unit The Wharton School University of Pennsylvania HERBERT

Philadelphia September 1975

TABLE OF CONTENTS PAGE FOREWORD

iii

CHAPTER I. DRUGSTORES A N D T H E PUBLIC REGULATION DILEMMA II. T H E

DRUGSTORE

INDUSTRY

3

Industry Structure

3

Independent Drugstores Chain Drugstores Growth in the Industry

4 6 8

Independent Drugstores Reactions Summary I I I . PRESCRIPTION DRUG PRICES DENT DRUGSTORES

IN

CHAIN

9 14 AND

INDEPEN15

The Lilly and NACDS-Lilly Digests Public Interest Research or Lobbying Groups (PIRG)-.. Industry Publications Private Corporate Surveys—Company No. 1 Prescription Drug Price Savings by Chain Drugstores .IV.

PRICE

COMPARISON

PRODUCTS V.

SUMMARY

FOR

AND

1

NONPRESCRIPTION -

15 20 28 32 38

DRUG

-

CONCLUSION

48 51

APPENDIX A.

OPERATING STATISTICS FROM The Lilly Digest AND The NACDS-Lilly Digest 1971-1974...

SELECTED

55 v

Table of Contents

vi APPENDIX B.

C.

D.

E.

F.

PAGE

DATA ON PRESCRIPTION DRUG PRICING FROM LILLY DIGEST AND THE NACDS-LILLY DIGEST

THE

DATA ON PRESCRIPTION PRICING FROM PUBLIC TEREST RESEARCH OR LOBBYING GROUPS

IN-

65

77

PRESCRIPTION PRICE DATA FROM PRIVATE CORPORATE SURVEY—COMPANY NO. 1

93

HEALTH AND BEAUTY AID COMMODITY DATA FROM PRIVATE CORPORATE SURVEY NO. 2

113

STATISTICAL ANALYSIS OF PRESCRIPTION PRICE DATA FROM PRIVATE CORPORATE SURVEY NO. 1 STATISTICAL

INDEX

145

CONSIDERATIONS

147

0 1 VALIUM (ROCHE, 5 MG. TABLET)

150

0 2 TETRACYCLINE H C L (GENERIC, 2 5 0 MG. CAPSULE)...

151

1 4 PHENAPHEN CAPSULE)

151

„

WITH „

CODEINE

(ROBINS,

30

MG. 203

LIST OF TABLES TABLE

PAGE

CHAPTER I I

1 2 3

4 5

Comparisons of Total Drugstore Sales Figures, 19671974

5

Selected Family Operated Chains of Eleven or More Units, 1974

7

Total Drugstore Sales and Projected Sales by Store Type and Size 1967-1980 and Annual Percentage Growth and Projected Growth in Drugstore Sales Volume by Store Type and Size, 1967-1980

10

Annual Drugstore Sales Volume and Percentage Sales Growth by Store Structure, 1957-1974

12

The Drugstore Industry by Store Structure and Affiliation, 1973 -

13

CHAPTER I I I

1 2 3 4 5 6 7

Estimates of Average Prescription Price by Store Structure, 1970-1973

17

Estimates of Prescription and Nonprescription Sales by Store Structure, 1970-1973

17

Selected Operating Statistics by Store Structure, 19701973

19

Miscellaneous Operating Statistics by Store Structure, 1970-1973 ......

20

Estimates of Average Prescription Cost by Store Structure Lilly and NACDS-Lilly Digests, 1970-1973......

21

Spread of Chain-Independent Differentials Public Interest Research Group Studies

22

Descriptive tions

27

Statistics

of

Combined -

PIRG

Organiza-

vii

viii

List of Tables

TABLE

8 9

PAGE

Estimates of Average Prescription Price by Store Structure Drug Topics, 1967-1974

30

Comparisons of Estimates of Average Prescription Price by Store Structure, 1968-1974 31

10 Average Price Per Dosage In Cents For Fifty Drugs By Store Structure .....

34

11

Prescription Price Savings by Store Structure

36

12

Prescription Price Savings in Percent for Large Chains..

39

13

Prescription Price Savings in Percent for Small Chains..

41

14

Estimates of Prescription Sales Volume for the Drugstore Industry, 1970-1974 .

45

CHAPTER I V

1

Tabular Analysis of Health and Beauty and Nonprescription Drug Data

49

APPENDIX A

A-l

through A-7. Current Trends in Independent and Chain Prescription and Pharmacy Department Operations, 1970-1973, Summary of the Average Chain Pharmacy, 1970

55

APPENDIX B

B-l

through B-5. Average Prescription Price by Pharmacy Location, Perceived Competition, Geographical Location, Volume of Sales

65

APPENDIX C

C-l

through C-13. Average Prescription Price and Convenience Services Offered by Store Structure, Various Months, 1972-1974, Various Locations. PIRG Prescription Price Observations by Magnitude of Percentage Differential

77

List of Tables APPENDIX

D-l

93

E

through E-118. Average Weighted Price of After Shave, Aspirins, Cold Tablets, Dentifrices, Deodorants, Mouthwashes, Razor Blades, and Shampoos, Various Sizes, May to June 1974 113

APPENDIX

F-l

D

through D-50. Prices of the Top Ranked Fifty Drugs by Store Structure, May 1973 to May 1974

APPENDIX

E-l

ix

F

through F-50. Statistical Analysis of Prescription Price Data of Drugs Ranked 1 through 50 153

FIGURE CHAPTER I I I

1

Prescription Price Savings by Magnitude

43

CHAPTER I

Drugstores And The Public Regulation Dilemma Public policy in the United States both supports small business in order to encourage upward movement, individual initiative and accomplishment, and economic stability, and at the same time encourages competition in order to provide consumers with better products, improved service, and lower prices. These twin objectives often lack congruity. Nowhere does this appear more obvious than in the retail drug industry. In a previous study 1 the Industrial Research Unit brought to public attention the numerous restrictions which the state regulatory boards have placed upon chain drugstores. Such regulations rose naturally from a close relationship between the drugstore and drug dispenser to public health and the need for rigid standards of quality and control. Prescription drug dispensing is closely regulated by licensing laws and by other means. As often is the case,2 such regulations have assumed an economic character which appears to be aimed at curtailing competition. Thus drugstore owners in most states are not free to layout stores as they wish or to advertise as they see fit. If legislation proposed in many states becomes law, they may not even be free to engage in business without a degree in pharmacy unless a partner has such a degree. Such legislation is designed (however disguised in health terms and consumer protection), to prevent the increasing incursion of chain drugstores, supermarkets, or general mer1. F. Marion Fletcher, Market Restraints in the Retail Drug Industry, Major Study No. 43 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1967). 2. For an analysis of the general problem of licensing for which there is a wide literature, see, for example, besides Fletcher, ibid., Elton Rayack, Professional Power and American Medicine: The Economies of the American Medical Association (Cleveland: The World Publishing Company, 1967) ; note, "Restrictive Licensing of Dental Paraprofessionals," Yale Law Journal, LXXXII (March 1974), pp. 806-826.

2

Prescription

Drug Pricing

chandisers into businesses which the independent drugstore owners believe "belong" to them. Support for such legislation hinges directly on the philosophy that drugstore chains and other merchandisers are a threat to the small businessman whose value has been clearly demonstrated and therefore he should be protected by government. Less stressed is the question of who serves the consumer best; and if such better service is performed by the independent drugstore owner, why does he need such restraints on the chains? One test of who serves the consumer best—and the basic test in a free society—is, of course, the price of goods sold. The purposes of this study are: (1) to examine the statistics on pricing by various types of drugstores and merchandisers; (2) to analyze their dependability and applicability; (3) to assess the extent to which price differences exist; and (4) to determine the causes for such differences. The drugstore industry is one of nationwide scope with enormous numbers of stores and plethora of products. These facts add to the significance of the industry, as well as to the difficulties of statistical comparisons and analyses. To address these problems, the Industrial Research Unit has collected all available pricing studies in order to determine if a common trend exists. It will be demonstrated that virtually all data collected, from whatever source, show that on similar items chain drugstores' prices are lower than independents' prices. It will also be demonstrated that the larger businesses which have been attracted to drug retailing have increasingly served consumer interests by offering products at a lower price.

CHAPTER II

The Drugstore Industry The drugstore industry is the retailing arm of drug care and distribution in the United States. Originally, drugstores were manufacturers as well as retailers, compounding drugs from medicinal agents in the store. At the time of the Civil War, traditional foreign supplies of these raw medicinal agents were interrupted, giving the impetus for the domestic beginnings of a drug manufacturing industry. Drug manufacturing gradually adopted and refined mass production techniques, making it increasingly economical for drugstores to relinquish the facets of manufacturing in which they were engaged, primarily drug compounding. Today, only a small percentage of drugs are compounded at the drugstore, while the great majority of prescription drugs are merely repackaged into smaller, individually labeled containers. The pricing of prescription products is of special significance. The well-being and lives of hundreds of thousands of persons depend on the prescriptions which they regularly have filled at drugstores. Many of those who have the greatest need for prescription medication, such as the elderly, the disabled, and the poor, are among the least able to pay for such medication.1 For these persons, significant savings in prescription costs may have far reaching effects.

INDUSTRY

STRUCTURE

The drugstore industry is conventionally divided into chain and independently owned stores. Varying definitions, however, exist within the industry as to the number of commonly owned stores which constitute chain ownership. The research organization, A. C. Nielsen Company, has traditionally used 1. "The Drug Users," Task Force on Prescription Drugs—Background Papers, U.S. Department of Health, Education, and Welfare, December 1968.

3

Prescription

4

Drug

Pricing

four or more commonly owned stores to constitute a chain and three or less commonly owned stores to constitute an independent. Drug Topics magazine 1 used the same definition until 1972. Both Drug Topics and Chain Store Age, Drug Edition3 now consider an independent as single store ownership, and chain ownership as that of two or more stores. Both definitions appear with frequency in the data cited by this study, with source and definition appropriately noted. All three organizations agree quite closely on total retail sales for the industry, as shown in Table II-l. Industry sales were greater than $15 billion in 1973, showing an annual average increase of about 6 percent per year over the last seven years. This rather stable growth for the industry conceals the rapid growth of chain drugstores combined with the shrinking importance of independent drugstores. Independent

Drugstores

Traditionally, independent drugstores have been closely held neighborhood stores, emphasizing services and convenience over price and selection. Store areas tend to be relatively small, and prescription drugs account for more than 50 percent of total sales. In addition to its prescription business, the store usually carries limited lines of nonprescription drugs, health and beauty aids, cosmetics, and toiletries. Product markups tend to be high, and smaller, convenience sizes are predominantly sold. Although there will probably always be a market for the convenience drugstore, many factors have worked against the viability of the small independent. The growth and success of shopping centers attest to the widening area in which a consumer will travel to shop, with concurrent enlarged competition for the neighborhood store. Other retailers, including supermarkets and mass merchandisers (department and discount centers, etc.), now carry traditional drugstore items such as nonprescription drugs, and health and beauty aids. There are now more than 1,000 prescription departments in mass merchandising stores, and food stores outsell drugstores in every major category of health and beauty aids.4 Drug chains 2. Published by Medical Economics Company. 3. Published by Lebhar-Friedman, Incorporated. 4. "39th Annual Nielsen Review of Retail Drug Store Trends, Health and Beauty Aids Sales," A. C. Nielsen Company, pp. 16-19.

The Drugstore

5

Industry TABLE I I - l

Comparisons

of Total Drugstore

Sales

Figures

1967-197A

($ billions) Year

Nielsen Survey"

Nielsen Census b

Chain Store Age e

Drug Topics"

1974

n.a.

n.a.

$16.74

$16,367

1973

n.a.

n.a.

15.46

15.279

1972

$14.47

?14.77

14.51

14.443

1971

13.73

13.86

13.70

14.118

1970

13.00

13.22

12.78

13.501

1969

12.34

12.34

11.88

12.860

1968

11.92

n.a.

11.43

12.065

1967

11.14

10.87

10.44

11.103

Sources:

»"34th-39th Annual Nielsen Review of Retail Drug Store Trends, Trend of Retail Drug Stores Sales," A. C. Nielsen Company, 196874. (Some figures are incorrectly reported in these volumes. The figures listed above were verified by Mr. F r a n k H a r t and Mr. Russell E. Shaw of the A. C. Nielsen Company and are correct when in contradiction with the Annual Review volumes.) Nielsen Survey figures are projected on the basis of a fiscal year beginning and ending in fiscal December. Because they include the previous year's Christmas sales and not this year's, they are expected to be somewhat smaller than Nielsen Census figures. b "38th-39th Annual Neilsen Review of Retail Drug Store Trends," Chart 1, "All Commodity Dollar Volumes—Estimates and Projections." Figures exclude Alaska and Hawaii, and are based on the Census of Business, Bureau of the Census, Department of Commerce. c "1974 Annual Report of the Chain Drug Industry, Ten Years of Chain Drug Growth," Chain Store Age, Drug Editions, (May 1975), p. 97. d "23rd-26th Annual Drug Topics Consumer Expenditures Survey," Drug Topics (October 1973, 1974 and September 1970-1972).

have successfully adopted modern retailing techniques while many independents have failed to do so. In areas where minorities are a significant percentage of the population, chains have been successful in recruiting them for employment and thus projecting a better business image.* 6. F o r a discussion of the past failure of pharmacists' organizations affirmatively to promote minority entrance into the profession, see F. Marion Fletcher, The Negro in the Drugstore Industry, The Racial Policies of American Industry, Report No. 24 (Philadelphia: Industrial Research Unit, the Wharton School, University of Pennsylvania, 1971).

Prescription

6

Drug Pricing

In addition, violence and the changing character of the cities have made urban business difficult for the smaller druggist. The dispersal of ethnic communities and the growth of the drug abuse problem have made drugstores attractive robbery and violence targets. As a result, independents operating city drugstores have often been forced to close their doors and move to less dangerous areas. On the other hand, many independents have been quite successful, developing either large single stores or branching out into small chains with two to five locations. Such independents have the characteristics both of independents and of chains, so that demarcation between the two categories can be blurred and inexact. Indeed, most of the large chains today are the result of the entrepreneurial drive of former individual drugstore proprietors, as indicated by such company names as Walgreen, Longs, Genovese, Eckerd, and Hook. Table II-2 contains an incomplete listing of chain drugstore organizations which are operated by the founder or members of his family. Chain

Drugstores

Chain drugstores began in densely populated metropolitan areas, where strong consumer traffic coupled with a discount image brought in a high volume of sales. Metropolitan stores often did a sizable fountain business in addition to the traditional categories of prescription and nonprescription drugs, health and beauty aids, cosmetics, and toiletries; chain drugstores followed the shopping center boom into many suburban communities, and now can also be found in many small towns, as well. Chain drugstores may be divided into three basic store t y p e s bantam drugstores, conventional drugstores, and super drugstore units. R.evco Drug Stores, Rite Aid Corporation, and Keystone Centers are examples of corporations which have placed primary emphasis on the bantam drugstore format. These are drugstores of 2,000 to 7,000 square feet, located in downtown areas with dense pedestrian traffic. Such stores generally carry a limited mix of health and beauty aids, and often do not sell prescription drugs. Bantam stores require high turnover and efficient warehousing operations to succeed. Conventional drugstores, such as those owned by Hook Drugs. Jack Eckerd, and Peoples Drug Stores Corporation, range from

The Drugstore

Industry

7 TABLE II-2

Selected Family Operated

Chains of Eleven or More

Units

1974 Stores Operated

Drugstore Chain

Headquarters

Achter's Key Drug, Inc.

Rochester, New York

20

Arnold's Drug Stores, Inc.

Detroit, Michigan

29

Carl's Drug Company, Inc.

Rome, New York

18

Clark Drugs

Los Angeles, California

11

Dekoven Drug Company

Elk Grove Village, Illinois

15

Dunaway Drug Stores, Inc.

Marietta, Georgia

11

Dunnington's Management, Inc.

Brockton, Massachusetts

12

Gavin Herbert Pharmacies

Los Angeles, California

13

Genovese Drug Stores, Inc.

Melville, New York

41 16

Glaser Drug Company, Inc.

St. Louis, Missouri

Gunning-Casteel, Inc.

El Paso, Texas

Hook Drugs

Indianapolis, Indiana

166

Jack Eckerd Corporation

Clearwater, Florida

302

Katz & Besthoff, Inc.

New Orleans, Louisiana

46 15

18

Kerr Drug Stores

Raleigh, North Carolina

LaVerdiere's Super Drug Stores

Winslow, Maine

25

Longs Drug Stores

Walnut Creek, California

67

Muir Drug Stores

Grand Rapids, Michigan

20

Pearson Enterprises, Inc.

Alexandria, Louisiana

11

Raley's Drug Centers

Sacramento, California

19

Rennebohm Drug Stores, Inc.

Madison, Wisconsin

20

Ribordy Drugs, Inc.

Highland, Indiana

15

Rieger Medi-$ave Pharmacies, Inc.

Baton Rouge, Louisiana

60

Schuman Drug Company

Canton, Ohio

17

Skaggs Companies, Inc.

Salt Lake City, Utah

154 589

Walgreen Drug Stores

Chicago, Illinois

Webb's Fabulous Pharmacies, Inc.

Longwood, Florida

15

H. A. Woods Drug Company, Inc.

Evansville, Indiana

14

Source:

NACDS Membership Directory, 197b Edition, (Arlington: National Association of Chain Drug Stores, Inc., 1974).

Prescription

8

Drug Pricing

7,500 square feet to 15,000 square feet, and stress complete selections of traditional drugstore merchandise. Prescriptions are often a high percentage of store sales when compared to other drug chains, and merchandise sold in the store includes nonprescription drugs, health and beauty aids, toiletries, and cosmetics. Super drugstore units, primarily used on the West Coast, are units which are larger than 15,000 square feet. Longs Drug Stores, Pay 'N Save, and Pay Less Drug Stores corporations make extensive use of this store format. Super drugstores often have more than 30,000 square feet in floor area, and encompass many product lines which are not traditionally sold in drugstores. These stores also have very complete selections in conventional drugstore categories, and always have a prescription department. Because of this wide product assortment, super drugstores compete on some product lines with many other types of retailers, but are also able to increase the instore expenditures of their customers. Super drugstores may carry auto accessories, sporting goods, home electronics equipment and many other product lines that give them the appearance of a mass merchandising outlet rather than a drugstore. Growth in the

Industry

The modest annual growth which has been achieved by the drugstore industry as a whole conceals the strong development of chain drugstores in comparison to the much weaker performance of independents. This trend is clearly evident in data collected and published both by the A. C. Nielsen Company and by Chain Store Age, as shown in Tables II-3 and II-4, respectively. These organizations roughly agree on industry sales and growth rates. Each then procedes to segment the industry differently. Table II-3 uses traditional Nielsen categories which combine sales volume and number of stores to evaluate the industry. Independents are those with ownership of three stores or less. Independents are categorized according to annual company sales volume. Demarcation volumes are $100,000 and $200,000 of annual sales. Chain drugstores are defined in Table II-3 as organizations with four or more stores. Nielsen figures show small independent volume has halved in the period 1967 to 1972, while medium independent volume has also declined. Large inde-

The Drugstore

9

Industry

pendent store volume is increasing, but by a smaller percentage each year. Chain volume is clearly increasing substantially. One can conclude from the data in Table II-3 that the independent store with less than $100,000 of sales volume may well be a temporary occupant of the industry. Many of these stores have undoubtedly gone out of business, but it is also likely that a large number have leaped categories. Entrepreneurs who have started small stores, and then have been rewarded in the marketplace for efficiency and service, have entered the small independent group as a transitory statistic. Upon changing categories through successful growth, they have contributed to strength in the larger volume chain or independent categories, while increasing the softness in the category left behind, the small independents. Table II-4 shows the industry divided into single store companies and two or more store companies. Chains, defined in Table II-4 as two or more stores commonly owned, have demonstrated strong growth. Little information can be drawn from single store performance, except for the volatility of the group. Single stores have clearly done worse than chains, but the substantial growth differences from year to year suggest a fluid category, whereby today's single store owner may rapidly enter the chain store category, and vice versa, if chains are defined as two or more stores commonly owned. Many independents have also undoubtedly gone out of business as a result of competitive pressures or changing neighborhoods, resulting in increasing fluctuations in the statistics. INDEPENDENT

DRUGSTORES

REACTIONS

It is, of course, quite natural that independent store owners would react to their declining share of business. This they have done in two ways: first, by using the sympathy of the public and legislators for the small businessman, and by taking advantage of their location in every congressional and state legislative district, they have sponsored numerous restrictions both on chain store operations and on the supply of druggists. 4 Another approach of combating the growing competition of the chains has been the organization of voluntary and cooperative 6. On this point, besides Fletcher, op. cit., see E. C. Erikson, "An Analysis of the Factor Market for Pharmacists," unpublished Ph.D. dissertation, University of Southern California, 1970.

Prescription Drug Pricing a 3

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Prescription

32

Drug

Pricing

approach a true estimation of the magnitude of these larger chains, further information is required. PRIVATE

CORPORATE

SURVEYS—COMPANY

NO. 1

Proprietary data on the movement of traditional drugstore items are collected by a number of corporate research entities. Such data are compiled and collected usually for sale to specific branded product manufacturers, who use the information to analyze any softness in the market, their products' market penetration and that of their competitors. One such organization pays pharmacists in various parts of the country to report data on new prescriptions purchased by consumers. These data are computerized into massive listings and include the figures of prescription price, prescription quantity, and an identifier both for the store at which the new prescription was purchased and the name of the drug purchased. The drug name is specified as a brand or generic name, depending on how the prescription was written, with dosage strength and form given. These data were received and verified by the Industrial Research Unit in their raw form. The data contain solely new prescription prices, without refills considered. A total of 222,660 nationwide pricing observations were utilized in a statistically stratified sample to offer the most accurate estimation of the pricing differences in prescription medication between chain and independent drugstores uncovered in our research. The survey consists of information for the top selling, most widely dispensed, fifty prescription drugs, in which a single drug is defined as a given branded or generic prescription drug of one dosage form and strength. For example, three dosage forms and strengths of Ampicillin, a generic listing, are in the survey. Two are differing strengths in capsule form, while the other is granulated for oral suspension. Two types of Actifed, a branded drug, are in the survey, one a syrup dosage and one in tablet form. The different drugs are listed by their dispensing popularity, from one to fifty. Because of the rapid decrease in observations for a given drug as its dispensing rank declines, it was infeasible to obtain or to include further observations. Indeed, the drugs examined have been rigorously tested both for their appropriateness as a base of measure for central tendency and for their statistical validity as an estimator for all drugstores nationwide.

Prices

in Chain and Independent

Dmgstores

33

Tables D-l through D-50 in Appendix D show the average prices per unit dosage, as well as sample size and percent, of the fifty drugs surveyed. These tables follow drug rank, which is an ordinal index of the relative popularity of each from one to fifty for the time period May 1973 to May 1974. Although even the smallest number of observations in any categoiy represents a statistically significant amount, it is apparent that the data more conclusively cover independent single stores. Typically, 75 percent of the observations of a given drug are from single store independents, 15 percent are from small chains of between two and ten units in size, while the remaining 10 percent are observations originating in conventional or large chain drugstores with at least eleven units. Thus the sample varies in its ability to predict what was the average price per unit tablet, or dosage, for all stores in one of the three categories. It is clear that the independent price per unit is an excellent estimator for the average independent price. For independents total observations range from 10,744 as shown in Table D-l, to 1,825 as shown in Table D-46. Small chain sample sizes vary from 2,238 observations to 330, while large chain observations vary from 1,392 to 154. The great majority of large and small chain drug samples are also representative, while even the comparatively small sample of 154 filled prescriptions can be valid and informative, since it comes from a random stratified sample of large chain drugstores nationwide. Table 111-10 lists the arithmetic means, or the average price per dosage in cents, for the fifty drugs surveyed. It is clear that large chains always offer a lower price for the identical drug, on the average, when compared with independent or small chain drugstores, which between themselves are virtually undifferentiable. In the previous section, the author noted that published data, especially the research of industry periodicals, drew strong distinctions between drugstore companies of two or three stores, considered small chains, and those of only one, considered independents. In the areas of prescription price and volume estimates, small chains behave as multistore independents, and do not exhibit the strong discount philosophies which larger chains do. As is shown in Table 111-10, the pricing performance of small chains and independents cannot be differentiated, with independents as often as not pricing slightly lower, on the average, than the small chains.

Prescription Drug Pricing

34

Table 111-10 Average Price Per Dosage in Cents for Fifty Drugs By Store Structure

Prescription Drug Rank And Name

Small Large Independent Chain Chain Average Average Average Price Price Price (cents) (cents) (cents)

01 Valium (5 mg.)

13.348

13.397

11.250

02 Tetracycline HCL

12.518

12.427

9.509

03 Empirin Compound With Codeine

13.831

14.787

12.339

04 Darvon Compound 65

15.089

15.477

12.583

05 Ampicillin (250 mg.)

22.745

22.707

17.382

06 Lasix

15.120

14.845

12.595

07 Percodan

14.075

14.229

12.748

08 V-Cillin K

18.135

18.365

15.891

09 Achromycin-V

14.489

13.942

10.955

10 Lomotil

14.433

14.255

12.450

11 Butazolidin alka

15.453

15.486

13.671

12 Librium

11.378

11.552

8.919

13 Valium (2 mg.)

11.487

11.510

9.139

14 Phenaphen With Codeine

16.687

16.812

15.636

15 Erythrocin

27.265

26.764

23.135

16 Indocin

12.781

12.758

10.717

17 Actifed

10.629

11.004

9.301

18 Sumycin

12.741

12.121

9.728

19 Cleocin

35.471

34.751

32.026

2.037

2.124

1.730

19.422

20.133

16.748

22 Phenergan Expectorant With Codeine

2.261

2.416

1.962

23 Prednisone

7.567

7.634

5.012

24 Hydrodiuril

11.212

11.684

8.691

2.146

2.166

2.027

20 Benylin Expectorant 21 Ornade

25 Dimetapp

5.724

5.295

4.982

27 Erythromycin (250 mg.)

23.530

22.957

19.761

28 Dimetapp (12 mg.)

17.030

16.714

14.919

26 Donnatal

Prices in Chain and Independent TABLE I I I - 1 0

35

Drugstores (continued)

Prescription D r u g R a n k And N a m e 29 Vibramycin 30 Mycolog

Small Independent Chain Average Average Price Price (cents) (cents)

Large Chain Average Price (cents)

101.583

104.873

94.767

33.113

33.420

30.476

31 Ovral

11.722

10.560

9.372

32 Ilosone

33.329

32.639

30.376

33 Aldomet

10.855

10.523

9.264

34 Librax

11.496

11.040

9.407

4.316

4.430

3.646

36 Keflex

49.554

49.987

46.229

37 P r e m a r i n

11.278

10.667

9.228

38 Darvocet-N

11.161

11.304

9.339

4.698

4.468

3.392

34.783

35.807

28.421

35 Ampicillin (250 mg. g r a n u l e )

39 Lanoxin 40 Ampicillin (500 mg.)

7.122

7.348

6.069

42 Dyazide

12.298

12.838

10.488

43 Tylenol W i t h Codeine

15.119

16.519

13.831

44 Equagesic

14.861

14.965

13.171

41 G a n t r i s i n

45 Actifed ( s y r u p ) 46 Mycostatin 47 E r y t h r o c i n (200 mg. granule) 48 Dalmane 49 P h e n e r g a n VC Expectorant W i t h Codeine 50 Diuril Source:

2.512

2.342

2.042

21.079

21.699

18.507

5.141

5.045

4.704

13.899

14.855

13.033

2.389

2.377

2.216

11.683

12.049

9.298

Appendix F .

Both small chains and independents, however, price identical commodities at higher levels than large chains, where on the average, consumers can purchase at the most favorable prices (Table I I I - l l ) . Consistent with previous percentage calculations, Table III-ll shows independent average prescription prices as the base of all percentage figures in the table, and the cents

Prescription Drug

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38

Prescription Drug Pricing

and percentage difference of both small and large chain drugstore average prices from the independent average for identical prescription drugs. Negative figures in Table III-ll are differences of a higher price than the independent average price, while positive differentials are savings. Table I I I - l l shows large chain savings to vary from 34 to 6 percentage points with savings averaging about 15 percent. Table 111-12 lists the percentage price differentials of Table I I I - l l for large chains from high to low. While small chain savings are close to zero, large chain savings are clearly substantial. Table 111-13 lists small chain price differentials in order of magnitude. In addition, Figure III-l presents a graphical analysis of the data which sharply delineates the differences in pricing practices between small and large chains. It can be seen that small chain savings average zero throughout the fifty drugs, while large chain savings average 15 percent throughout the fifty drugs. In addition, there is no evidence to suspect that percentage savings vary with the relative prescribing frequency of drugs. Savings do not show a tapering off effect as a given drug recedes from enjoying high sales levels. Hence, it is likely that 15 percent savings, on the average, are realized throughout the spectrum of prescription medications. In conclusion, an analysis of the arithmetic means, or the common average, of these data indicate that large chains offer the consumer about 15 percent savings, on the average, :n prescription cost, when compared to the price of an identical prescription commodity sold by independent drugstores. The pricing practices of small chains are indistinguishable from the practices of independently owned stores and do not merit separation. PRESCRIPTION DRUG PRICE SAVINGS CHAIN DRUGSTORES

BY

We have thus provided data showing that chain drugstores save the consumer a significant percentage of price in the purchase of prescription drugs over what the consumer would be charged by independent drugstores. Savings of 15 percent on the average prescription total to a substantial figure nationwide, in view of the fact that the drugstore industry le-

Prices in Chain and Independent

Drugstores

39

TABLE 111-12

Prescription

Price Savings

In Percent

D r u g Rank And Name

For Large

P e r c e n t a g e Price

23 Prednisone

33.77

39 Lanoxin

27.80

09 Achromycin-V

24.39

02 Tetracycline HCL

24.04

18 Sumycin

23.65

05 Ampicillin (250 mg.)

23.58

24 Hydrodiuril

22.48

12 Librium

21.61

13 Valium (2 mg.)

20.44

50 Diuril

20.41

31 Ovral

20.05

45 Actifed (syrup)

18.71

40 Ampicillin

18.29

37 P r e m a r i n

18.18

34 Librax

18.17

06 Lasix

16.70

04 Darvon Compound 65

16.61

38 Darvocet-N

16.32

16 Indocin

16.15

27 E r y t h r o m y c i n

16.02

01 Valium ( 5 m g . )

15.72

35 Ampicillin (250 mg. g r a n u l e )

15.52

15 E r y t h r o c i n

15.15

20 Benylin Expectorant

15.07

41 Gantrisin

14.79

42 Dyazide

14.72

33 Aldomet

14.66

21 Ornade

13.77

10 Lomotil

13.74

22 P h e n e r g a n Expectorant W i t h Codeine

13.22

26 Donnatal

12.96

Chains

Prescription Drug Pricing

40 TABLE 111-12

(continued)

Drug Rank And Name

Percentage Price Differentials

17 Actifed

12.49

28 Dimetapp (12 mg.)

12.40

08 V-Cillin K

12.37

46 Mycostatin

12.20

11 Butazolidin alka

11.53

44 Equagesic

11.37

03 Empirin Compound With Codeine

10.79

19 Cleocin

9.71

07 Percodan

9.43

32 Ilosone

8.86

43 Tylenol With Codeine

8.52

47 Erythrocin (200 mg. granule)

8.50

30 Mycolog

7.96

49 Phenergan VC Expectorant With Codeine

7.24

29 Vibramycin

6.71

36 Keflex

6.71

14 Phenaphen With Codeine

6.30

48 Dalmane

6.23

25 Dimetapp (12 mg.)

5.55

Source:

Appendix P and Table III-ll.

ceived $16 billion in total sales, $ 6 , 6 4 9 billion of which Drug Topics estimates was spent on prescription drugs. Table 111-14 shows industry estimates of total, independent, and chain volume. Drug Topics estimates that in 1974 chain drugstores received $ 2 , 4 2 9 million in prescription sales, while Chain Store Age reports a figure of $ 1 , 9 0 5 million. The difference between the two figures, 21.6 percent, illustrates the problem of estimating the savings provided by chain drugstores for the consumer. As was previously noted, the estimation bases used by the two organizations are significantly different. Drug Topics, formulating its base through mailed questionnaires, would seem to achieve significantly greater cooperation from the smaller chains. Chain Store Age, on the other hand, purposely

Prices in Chain and Independent

Drugstores

TABLE

Prescription

Price

Savings

41

111-13

In Percent

Drug Rank And Name

For

Small

Chaîna

Percentage Price Differentials

31 Ovral

9.91

26 Donnatal

7.49

45 Actifed (syrup)

6.77

37 Premarin

6.42

39 Lanoxin

4.90

18 Sumycin

4.87

34 Librax

3.97

09 Achromycin-V

3.78

33 Aldomet

3.06

27 Erythromycin

2.44

32 Ilosone

2.07

19 Cleocin

2.03

47 Erythrocin (200 mg. granule)

1.87

28 Dimetapp (12 mg.)

1.86

15 Erythrocin

1.84

06 Lasix

1.82

10 Lomotil

1.23

02 Tetracycline HCL

0.73

49 Phenergan VC Expectorant With Codeine

0.50

16 Indocin

0.18

05 Ampicillin

0.17

13 Valium ( 2 m g . )

—0.20

11 Butazolidin alka

—0.21

01 Valium (5 mg.)

—0.37

44 Equagesic

—0.70

14 Phenaphen With Codeine

—0.75

36 Keflex

—0.87

23 Prednisone

—0.89

25 Dimetapp

—0.93

30 Mycolog

—0.93

07 Percodan

—1.09

42

Prescription

Drug

Pricing

TABLE 111-13 (continued) Drug Rank And Name

Percentage Price Differentials

08 V-Cillin K

—1.27

38 Darvocet-N

—1.28

12 Librium

—1.53

04 Darvon Compound 65

—2.57

35 Ampicillin (250 mg. granule)

—2.64

40 Ampicillin (500 mg.)

—2.94

46 Mycostatin

—2.94

50 Diuril

—3.13

41 Gantrisin

—3.17

29 Vibramycin

—3.24

17 Actifed

—3.53

21 Ornade

—3.66

24 Hydrodiuril

—4.21

20 Benylin Expectorant

—4.27

42 Dyazide

—4.39

22 Phenergan Expectorant With Codeine

—6.86

48 Dalmane

—6.88

03 Empirin Compound With Codeine

—6.91

43 Tylenol With Codeine

—9.26

Source:

Appendix F and Table I I I - l l .

emphasizes the larger and public chains because it believes these organizations better reflected the trends in the chain segment of the industry. As such, one would expect characteristics of small chains in the data reported by Drug Topics, and those of the larger chains in the data reported by Chain Store Age. Consistent with the typical small chain, Drug Topics would report a high prescription volume as well as a higher prescription price. Small chains tend to exhibit a higher proportion of prescription sales to total sales as well as a higher prescription price, since the small chain has not acquired the efficiencies and economies of the larger chains. The large or public chains would do less prescription volume to total volume,

Prices in Chain and Independent

Drugstores

+ +

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46

Prescription Drug Pricing

because of the large assortment and extent of other product lines carried. Because of the peculiarities of each organization's estimates, it is difficult to determine the exact extent of consumer savings for which chain drugstores are responsible. When this is matched with the compendium of pricing data brought to light in previous pages, the problem is compounded. The diversity of tenable answers is demonstrated by utilizing, for the present, figures available through industry publications. For example, we have already cited that Drug Topics estimated that $6,649 billion was spent on prescription drugs in 1974, of which $2,429 billion was spent in chain stores. Chain Store Age's figure for the latter was $1,905 billion. Depending on what figure we utilize as a differential price ratio between chains and independents, we can estimate substantially significant savings. If the Public Interest Research Group findings are correct, price differentials of 25 percent coupled with Drug Topics' figures for chain industry volume would place consumer savings at a yearly figure of over $600 million. On the extreme low side, using Drug Topics' figures for both chain industry volume and price differentials would place consumer savings at slightly over $88 million. Even at the low extreme, total savings are considerable. Chain Store Age's figures for both chain drug prescription volume and average prescription price also show high savings. A significant problem exists in the Chain Store Age data because the organization collects no data from independently owned stores. A price differential must therefore be compiled by using LiUy or Drug Topics for independent drugstore prescription prices. This figure can be only a loose estimate, because errors and deviations in both sets of data are likely to compound, rather than mitigate statistical problems. Nevertheless, using Chain Store Age figures for 1973 and comparing them to those of the Lilly Digest figures for the same year, a differential in average prescription price of $0.49 per prescription is found, indicating savings of $178 million. Confidence is encouraged by the fact that Chain Store Age's average prescription price for 1973 is within four cents of that determined by NACDSLilly, the Lilly Digest's sister publication. For 1974 estimates, the Lilly Digests are not currently available. Drug Topic's figures have been quite close to the Lilly Digest's figures in

Prices in Chain and Independent

Drugstores

47

1973 and 1972, so that it is likely that the 1974 Drug Topic's figure will be close also. Utilizing Drug Topics independent average prescription price, the only published independent price for 1974 available at this time, and comparing it with the 1974 chain price of Chain Store Age, the price most indicative of the larger chains, yields a price differential of $0.37. This figure indicates savings of $151 million. The Industrial Research Unit believes the most meaningful figures are those of the first private corporate survey, which indicated savings of 15 percent for the large, ten units and over chains. Prescription sales volume is unfortunately unknown for this group of stores. Relatively good estimation is, however, possible. Chain Store Age8 reports that the largest 15 chains did 47 percent of all chain drug sales in 1974 with 26 percent of all chain drugstores. The ten or more store chain group consisted of 172 companies with 10,509 stores. Small chains, according to Chain Store Age, numbered 2,799 companies with 7,683 stores. Chains of ten or more store size would therefore have 58 percent of all chain stores, would be larger, on the average, than smaller chains and would do a larger sales volume. Sales volume for this group is probably close to or exceeding 70 percent of total chain drugstore sales. This would give large chains a prescription volume of roughly $1,334 million of the total chain prescription volume of $1,905 million, indicating savings of $200 million from just the large chain sector of the industry. Given the many possible figures, and the wide range in which they fall, a safe estimate, conservative in the face of unknown accuracy, would be $200 million. On the basis of the previous data this figure would seem to be the most reasonable. It goes without saying that such figures must be utilized with caution, given the fact that Drug Topics and Chain Store Age cannot even agree by several millions as to the value of total prescriptions sold, and with such data as we have on price differentials varying from 10 to 50 percent, a satisfactory estimate of savings is difficult to derive. It is clear, however, that whatever data are examined, they uniformly point in the direction of substantial and significant savings by a chain drugstore purchase, as compared to that of an independent. 3. "The 1975 Annual Report of the Chain Drug Industry," Chain Store Drug Editions, May 1975.

Age,

CHAPTER IV

Price Comparison Nonprescription

Drug

For Products

A second corporate entity collects data of health and beauty aid, nonprescription drug, and commodity movement throughout the retail sector of the economy. The Industrial Research Unit has received pricing data for eight commonly purchased health and beauty aid products in the three sectors of retailing where these products are commonly bought: drugstores, food stores, ami mass merchandisers (discount houses and department stores). Tables E-l through E-118 in Appendix E display these data for eight separate product groups, containing a total of thirty-one nationally advertised, branded products. The product groups are after-shaves, aspirins, cold tablets, dentifrices, deodorants, mouthwashes, razor blades, and shampoos. The data are tabulated by product and product size, as well as by store type. Nine store structures have been surveyed, small, medium, and large independent drugstores, small, medium, and large food store independents, chain drugstores, chain food stores, and mass merchandisers. Each table lists the average weighted price of the table commodity of a given packaged size for each store structure, the difference of that price from the chain drug price, and finally a price index on the basis of chain drug price. Each table also orders the prices of the different store structures from high to low. Table IV-1 has been constructed according to the price ranking of the tables in Appendix E. Table IV-1 lists the instances of each price rank for a given type of store. For example, chain drugstores, represented in the left-most column of Table IV-1, averaged the highest price of any store type for one commodity, the second highest price for one commodity, the third lowest price fifty-one times, and the lowest price sixteen times. Thus, looking at Table IV-1, 48

Price Comparison for Nonprescription Drug Products

49

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Prescription Drug Pricing Average Prescription

TABLE B - 2

Price By Perceived 1970-1973

Competition

Mild Competition

Average Competition

Intense Competition

(123) $4.02

(898) $4.15

(473) $4.01

(70) $4.61

(493) $4.59

(203) $4.50

Chain

(120) $3.89

(821) $3.94

(392) $3.79

Independent

(137) $4.39

(1,051) $4.40

(574) $4.35

(78) $3.71

(641) $3.88

(312) $3.80

(172) $4.13

(1,178) $4.23

(592) $4.19

(79) $3.66

(692) $3.82

(370) $3.69

(189) $4.07

(1,175) $4.06

(534) $4.09

Year Operations for 1973 Chain Independent Operations for 1972

Operations for 1971 Chain Independent Operations for 1970 Chain Independent Note:

All figures from NACDS-Lilly and Lilly Digests, 1971-74. Numbers in parentheses are the number of responding pharmacies in the category.

Appendix B

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APPENDIX C Data O n Prescription Pricing From Public Interest Research Or Lobbying Groups

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Prescription Drug Pricing

92 TABLE C - 1 3

PIRG Prescription Price Observations By Magnitude Of Percentage Differential Unweighted Observations a 55.9

54.2

48.3

37.6

36.7

36.4

35.8

34.5

33.3

32.7

32.3

32.0

30.9

27.4

26.7

26.7

26.4

26.3

26.0

26.0

25.8

25.8

25.7

25.6

25.2

24.0

23.9

23.6

23.2

23.0

20.9

20.6

20.0

19.7

19.2

18.3

17.7

17.2

16.9

16.3

16.0

15.9

15.4

15.3

15.1

14.7

14.2

13.5

13.5

13.2

13.1

12.3

11.3

10.6

10.5

8.8

8.7

8.3

8.1

6.9

6.9

6.7

6.5

6.5

5.8

5.0

4.3

0.5

—3.1

—3.4

—7.0

—8.4

—8.9

Weighted Observations b 55.9

54.2

48.3

37.6

36.7

36.4

35.8

34.5

33.3

32.7

32.3

32.0

30.9

27.4

26.7

26.7

26.4

26.3

26.0

26.0

25.8

25.8

25.7

25.6

25.2

24.0

23.9

23.6

23.2

23.0

20.9

20.9

20.9

20.9

20.9

20.9

20.9

20.6

20.0

19.7

19.2

18.3

17.7

17.2

16.9

16.3

16.0

15.9

15.4

15.4

15.4

15.4

15.4

15.4

15.3

15.1

14.7

14.2

13.5

13.5

13.2

13.1

12.3

11.3

10.6

10.5

8.8

8.7

8.3

8.1

6.5

5.8

5.0

4.3

0.5

—3.1

6.9

6.9

6.7

6.5

—3.4

—7.0

—8.4

—8.9

Source:

Tables C-l to C-12, Appendix C. Industrial Research Unit calculations. »Drug "market baskets" are weighted as single drugs. ' D r u g "market baskets" are weighted according to the number of drugs included.

APPENDIX D Prescription Price Data From Private Corporate Survey—Company No. 1 (All data in possession of The Industrial Research Unit)

95

Appendix D "AfiT-V .n-i BT PRODUCT AND STORE MAT 1 9 7 3 TO MAT 1 9 7 4

PRICES VALIUM (ROCP.E.S DRUG RANK"1 77PP

OF STOflff

PERCENT

TABLET) INDEPENDENT SINGLE STORE

OP SAMPLE«

SAMPLE

7

SIZE

PRICE »

MG.

PER

25 5

UNIT

DOSAGE

STORES

IN

SAMPLE

3

.

SMALL CHAIN 2 - 1 0 UKITS

1

5

TETRACTCLINE DRUG RANK =2 TTPE

RCL

(GENERIC

9.52

10744

2238

1392

13.35

1 3 . 40

1 1 . 25

OP UNKNOWN

PRICE

SIZE PER

«115

UNIT

STORES

DOSAGE IN

SAMPLE

,250

MG.

PERCENT SAMPLE PRICE »

208

SMALL CHAIN 2 - 1 0 UNITS

1817

1262

12.52

12.43

9.51

OF UNKNOWN

STRUCTURE

(BURROUGHS

71.39

STORES

DOSAGE IN

SAMPLE

STRUCTURE WELLCOME,30

SMALL CHAIN 2 - 1 0 UNITS

8183 UNIT

1 0 . 3 ?.

D- 3

INDEPENDENT SINGLE STORE

SIZE

CONVENTIONAL CHAIN OVER 1 0 UNITS

9206

BT PRODUCT AND STORE MAT 1 9 7 3 TO MAT 1 9 7 4

OF SAMPLE*

PER

CAPSULE)

14 . 6 5

EMPIRIN COMPOUND WITH COD"TVF DRUG RANK = 3 OP STORE

STRUCTURE

74.24

TAHI,y. PRICES

TTPE

STRUCTURE

D-2

INDEPENDENT SINGLE STORE

OP SAMPLE»

SAMPLE

3

BT PRODUCT AND STORE MAT 1 9 7 3 TO MAT 1 9 7 4

OP STORE

PERCENT

.

CONVENTIONAL CHAIN OVER 1 0 UNITS

0

TAP-:,?. PRICES

STRUCTURE

13.83 OF UNKNOWN

17.67 2026 14.79 STRUCTURE

MG.

TABLET)

CONVENTIONAL CHAIN OVER 1 0 UNITS 9.13 1046 12.34

Prescription Drug Pricing

96 PRICES

TABLE D - 4 BT PRODUCT AND STORE MAT 1 9 7 3 TO MAI 1 9 7 4

DARVON COMPOUND 6 5 DRUG RANK-^ TIPE

OF STORE

PERCENT

ÇLILLT.PULVULE) INDEPENDENT SIRGLE STORE

OP SAMPLE•

*

PER UNIT

111

STORES

DOSAGE

TTPE

OF

If.21

7.57

7245

1336

712

15.09

15.48

12.58

OF

SAMPLE

SIZE

SAMPLE*

PER UNIT

»68

STORES

IN

PRICES

TIPE

DOSAGE SAMPLE

OF STORE

PERCENT

OF SAMPLE*

SAMPLE SIZE PRICE

PER UNIT DOSAGE

•68

STORES

SAMPLE

CONVENTIONAL CHAIN OVER 1 0 UNITS

75.16

14.35

9.49

5061

966

639

22.74

22.71

17.38

OP UNKNOWN STRUCTURE

40

"6.

INDEPENDENT SINGLE STORE

IN

SMALL CHAIN 2 - 1 0 UNITS

TABLF P-B BT PRODUCT AND STORE MAT 1 9 7 3 TO MAT 1 9 7 4

(.HOECHST-ROUSSEL, RANK*6

STRUCTURE

MG. CAPSULE)

INDEPENDENT SINGLE STORE

PRICE

LASIX DRUG

TABLE 0 - 5 BT PRODUCT AND STORE MAI 1 9 7 3 TO MAT 1 9 7 4

(GENERIC . 2 5 0

STORE

PERCENT

CONVENTIONAL CS AIR OVER 10 URITS

IN SAMPLE OP UNKNOWN STRUCTURE

PRICES AMPICILLIN DRUG RANK =5

SMALL CRAIR 2 - 1 0 UNITS

77.0»

SAMPLE SIZE PRICE

STRUCTURE

STRUCTURE

TABLET) SMALL CHAIN 2 - 1 0 UNITS

CONVENTIONAL CHAIN OVER 1 0 UNITS

76.68

12.78

9.49

4984

831

617

15.12

14.84

12.60

OF UNKNOWN STRUCTURE

Appendix

97

D PRICES

TABLE D-7 BT PRODUCT AND STORE HA J 1973 TO MAT 197*

STRUCTURE

PERCODAN {ENDO ,S HO. TABLET) DRUG RANK=1 T1PE OP STORE PERCENT

INDEPENDENT SINGLE STORE

OF SAMPLE*

SAMPLE

SIZE

PRICE

PER UNIT DOSAGE

• 16

STORES

IN SAMPLE

PRICES

SMALL CBAIN 2-10 UNITS

CONVENTIONAL CHAIN OVER 10 UNITS

79.55

11.75

7.88

4482

662

lit

14.03

14.23

12.75

OP UNKNOWN

STRUCTURE

TAB LP. n-8 BT PRODUCT AND STORE MAI 1973 TO MAT 1974

STRUCTURE

V-CILLIN X (LILLY, 250 MG. TABLET) DRUG RANK =8 TYPE OP STORE PERCENT

INDEPENDENT SINGLE STORE

OF SAMPLE*

SAMPLE

SIZE

PRICE PER UNIT DOSAGE * 30

STORES

IN SAMPLE

PRICES ACHROMTCIN-V DRUG RANK =9

PERCENT SAMPLE

SIZE

STORES

8.84

1788

958

560

18.14

18.37

15.89

OF UNKNOWN

STRUCTURE

IN SAMPLE

STRUCTURE

MG.CAPSULE)

INDEPENDENT SINGLE STORE

PRICE PER UNIT DOSAGE «10

15.12

TABLE P-9 BT PRODUCT AND STORE MAT 1973 TO MAT 1974

OF SAMPLE*

CONVENTIONAL CHAIN OVER 10 UNITS

7 5.57

(LEDERLE , 250

TTPE OF STORE

SMALL CHAIN 2-10 UNITS

SMALL CHAIN 2-10 UNITS

CONVENTIONAL CHAIN OVER 10 UNITS

75.20

14.83

9.80

4413

870

575

14.49

13.94

10.96

OF UNKNOWN

STRUCTURE

98

Prescription TABLE PRICES

BI HAI

LOMOTIL {SEARLE,7.S MG. DRUG RANK'íO TIPE

OP

STORE

PERCENT SAMPLE

SIZE

PRICE

PER

UNIT

*

STORES

DOSAGE IN

SAMPLE

PRICES

BT MAI

BUTAZOLIDIN ALKA DRUG RANK'11 TIPE

SIZE

PRICE

PER

*

STORES

12

UNIT

DOSAGE

IN

SAMPLE

PRICES

BI MAI

LIBRIUM (ROCHE, 10 MG. DRUG RANK-12 TIPE

OP STORE

PERCENT SAMPLE

OP SAMPLE* SIZE

PER UNIT

*

STORES

IN

SMALL CRAIN 2 - 1 0 UNITS

CONVENTIONAL CHAIN OVER 1 0 UNITS

73.36

16.79

9.07

1109

910

508

11.13

11.26

12.45

OP UNKNOWN

STRUCTURE

TABLE D-11 PRODUCT AND STORE 1 9 7 3 TO MAI 1 9 7 *

STRUCTURE

DOSAGE SAMPLE

SMALL CRAIN 2 - 1 0 UNITS

CONVENTIONAL CHAIN OVER 1 0 UNITS

T6.22

15.89

7.11

1129

861

385

15.15

15.19

13.67

OP UNKNOWN

STRUCTURE

TABLE T>-12 PRODUCT AND STORE 1 9 7 3 TO MAI 1 9 7 1

STRUCTURE

CAPSULE)

INDEPENDENT SINGLE STORE

PRICE 38

TABLET)

INDEPENDENT SINGLE STORE

OP SAMPLE*

SAMPLE

STRUCTURE

(GEIGI,CAPSULE)

OP STORE

PERCENT

Pricing

D-in

PRODUCT AND STORE 1 9 7 3 TO MAI 1 9 7 4

INDEPENDENT SINGLE STORE

OP SAMPLE*

Drug

SMALL CRAIN 2 - 1 0 UNITS

CONVENTIONAL CHAIN OVER 1 0 UNITS

76.11

12.82

'9.98

3822

611

199

11.38

11.55

8.92

OP UNKNOWN

STRUCTURE

Appendix

99

D PRICES

VALIUM (R0CBE.2 DRUG RANK-Ì3 TIPS

TABLE P-13 BT PRODUCT AND STORB STRUCTURE MAT 1 9 7 3 TO. HAI 1 9 7 4

MG.TABLET)

OP STORB

INDEPENDENT SINGLE STORE

PERCENT OP SAMPLE*

76.05

SAMPLE SIZE PER UNIT DOSAGE

»57

STORES

11.49

(.ROBINS,30

OP STORE

INDEPENDENT SINGLE STORE

PERCENT OP SAMPLE*

64.71

SAMPLE SIZE

472

11.51

9.1»

PER UNIT DOSAGE STORES IB

STRUCTURE

MG. CAPSULE) SMALL CBAIN 2 - 1 0 UNITS

16.69

CONVENTIONAL CBAIW OVER 1 0 UNITS

19.40

302 9

7.35

908

344

16.81

15.64

SAMPLE OP UNKNOWN STRUCTURE

PRICES

TABLE P - 1 5 BT PRODUCT AND STORB STRUCTURE MAI 1 9 7 3 TO MAI 1 9 7 4

ERITBROCIN (ABBOTT,250 DRUG RANK=15 TIPE

66*

TABLE D-14 BT PRODUCT AND STORE MAI 1 9 7 3 TO MAI 1 9 7 »

PBENAPBEN WITB CODEINE DRUG RANK=1H

«400

9.47

IN SAMPLE OP UNKNOWN STRUCTURE

PRICES

PRICE

CONVBNTIONAL CBAIW OVER 1 0 UNITS

13.33

3789

PRICE

TIPE

SMALL CBAIN 2 - 1 0 VHITS

MG.PILMTAB)

OP STORE

INDEPENDENT SINGLE STORE

PERCENT OP SAMPLE*

75.08

SAMPLE SIZE

3483 9.7.27

SMALL CBAIB 2 - 1 0 UNITS 16.45 763

PRICE

PER UNIT DOSAGE

26.76

»20

STORES IN SAMPLE OP UNKNOWN STRUCTURE

CONVENTIONAL CBAIB OVER 1 0 UNITS 8.04 373 23.14

100

Prescription •TABLE .0-1 f. BT PRODUCT AND STORE HAT 1 9 7 3 TO HAT 1 9 7 «

PRICES IWVOCIW (MERCK, DRUG RANK=1& TIPB

SHARP

OP STORE

PERCENT SAMPLE

PER

UNIT

*

STORES

DOSAGE

7.73

3H96

570

311

75.32

*

STORES

UNIT DOSAGE IN

PRICES

TTPE

SAMPLE

*

STORES

11

UNIT IN

703

367

11.00

9.30

DOSAGE SAMPLE

STRUCTURE

CAPSULE)

INDEPENDENT SINGLE STORE

SIZE PER

CONVENTIONAL CHAIN OVER 10 UNITS 8.35

TABLE iJ-18 BT PRODUCT AND STORE MAT 1 9 7 3 TO MAT 197H

OP SAMPLE*

PRICE

SHALL CHAIN 2 - 1 0 UNITS

OP UNKNOWN STRUCTURE

2 5 0 MG.

OP STORE

PERCENT

10.63

SAMPLE

SUMTCIN (SQUIBB, DRUG RANK =18

STRUCTURE

15.99

3312

SIZE PER

15

INDEPENDENT SINGLE STORE

OF SAMPLE*

PRICE

10.72

WELLCOME.TABLET)

OP STORE

SAMPLE

12.76

OP UNKNOWN STRUCTURE

ACTIFED (BURROUGHS DRUG RANK-17

PERCENT

CONVENTIONAL CBAIN OVER 1 0 UNITS

12.81

TABLE fl-17 BI PRODUCT AND STORE MAT 1 9 7 3 TO MAT 1 9 7 4

PRICES

TTPE

- SMALL CRAM 2 - 1 0 UNITS

12.78

IN SAMPLE

STRUCTURE

7-.

tc ^ a; tc ft: tc t< c^ N Cl

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118

Prescription te x te t e ci te

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et n v. c n C H n n n n r t n r w nojh ^ o c TlHHHHrtHrHH

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Appendix E

123

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rt

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to

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in

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Prescription Drug Pricing CMin COaBe* Ohi m CN Ti Ti Ti Ti Ti Ti HQ ft: a: B.H

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Prescription Drug Pricing

128 «C >< CJ 1»: K Ci ft: t : ft* H tc Ci ec e K (1- C; cC c. ft; tc le t aP, rì< o tc a- tc ^ u: ti t-i I h P, k & t i Ec ft; % ^t Si ft, c: ft; le Si C C ^ c; c, fc le o c . ec •«< f- te E-. tc tr> S: ft, R t i >> >i

CV2 o> r* c ce Ti c rri o O o o CV «-4 Ti 1-« r i r i r i TÌ Ti

tc Cj s; tc o; tc k. tc K Ci

1 tc c ic CM O 10 r» • • • • • • • »ft; o r- n ¿r c r i c a CD CM CN TÌ Ti k-i s 5

tc cc ti ^ K S*. ft; tc P-. e

Ei CO r c, r i CC I/) • • • • • • • Ss f - r> a- C Ti e- ir, i ws ir. it c: c: Ti r i r l TÌ r i Ti Ti

te e ft; ft,

»

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ri c f» ri

te 2; ^ te

ft;

CI c. ^ Ci t i c. • C, C, ft; t c j t c K c t : Ci c: k. C,

tc c . t i t-> •s: t ;

ft;

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ft.

C. c; te te Ci ZT ^ ri ^

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r-* ce r* • « LT cr r ! C< CN 1-: r ;

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ce t: K ft; o,

^ te Ci se s

te t; K a;

tc ti % te et te c^ h. K Ci

te ti K ft; 0,

Ti C

E-, ce i ^ s: ^ i 1 te Sj E^ E, te ft; t. i ft, Q ti: ft, • te te' C I C C C H O O o o < • • • • ci t». Si Si c, c. i t i E^ e: cc n r- r- j i l t 1 G l Si cr cr cc r- r-Ci e ce ce • ft; te tH t-i Ti r i r i i P, t i s t . t ; Es te 1 V E-» S; c. e. 1 t5 >-> 1 K ts 1 te i i *e 1 1 ft; e. te o 1 Ci 1 t ^ t i e e. t i Ci t i C. • 1 s ; te t C Sì C ft: ^ e c 1 0; o et C, te Ci ft; te e ft; te 1 Ci u. Ci te ^ ^ e; te 1 cc, te te sì sì S •-i 5 ^ • te t i Ci K, H tr. H i et ce H Q; ft; «< ^ tr, e, ci ^ » c ft. 1 E.>. ^ Si ft; x te ^ te 2: 1 te E-, »-i ^ t i t i 2: 2: te 55 te

ft.

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Appendix E

129

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E-i to

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ft.

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t V o ra te to r-i in to ^ E, te U S; to 1 >1 te ft: ^rr;: 1 H Ei

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te

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a . to

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r— o •

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a- c Ti O. ti TH i 1 l

CM tn CM »Hic • • « • • CT> n CA c: CI C3 cc a rTi Ti Ti TÌ Ti

te te te

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ti ft • A C T ti t; ft a C C te ft: =i e C O ti. C ft tk. fc. i; ÌÌ t-i Si ^ te te te t3 H t i K to H « K >-i ft; t 1 1 to t &i E te 5: i : ft: «t a; 5 tj i i i ti

CC X tO Iti t-1 Ci

J Cl O IC cs O M J l CM TH Ti TÌ o o c i o i-i TÌ TÌ TÌ TÌ Ti

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te

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130

Prescription Drug Pricing tc X t i tc •s t i • t a. B.N

EH ti

to C N C. H 0; CO B< C ft: ic te t i »

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