S.F. drug prices outpace nation’s
Prescription charges way above average, study says
When Christina Hale ducked into a CVS on San Francisco’s Market Street on Thursday to pick up a prescription she’d accidentally left at home in Indianapolis, the price tag came as a surprise.
Hale, who was in town on business, usually pays $10 for a monthlong supply of the medication. But at the San Francisco pharmacy, she was charged $11.99 for just a five-day supply.
Hale isn’t sure why her medication cost as much as it did in San Francisco — she surmised it could’ve been because her insurance had already helped cover the previous supply — but said the lack of transparency was troubling.
“It’s frustrating that as a patient away from home who needs medicine there’s a lack of transparency and consistency,” said Hale, a former state lawmaker who now works at the nonprofit Kiwanis International. She added
that customers are essentially “held hostage” to pharmacies’ prices.
Prescription drugs cost 14% more in San Francisco compared with the national average, making it the second most expensive U.S. city for prescription medications, according to an analysis released Thursday by GoodRx, a website that tracks prescription drug prices. Incidentally, in Indianapolis, prescription drugs cost 11% less than the national average, the report found.
GoodRx ranked the 30 most populous U.S. cities, identifying the 10 most and 10 least expensive places for prescription drugs. New York topped the former group, with costs 17% higher than the national average; Atlanta topped the latter, with costs 20% lower than the national average.
The report does not include a dollar figure for the national average.
The findings reflect the cash price for drugs — how much a patient would have to pay if they bought it at a pharmacy without insurance or discounts.
GoodRx, a Santa Monica company, analyzed insurance claims for the 500 most commonly prescribed prescription drugs, including brand names and generics, in the 30 cities from April 2018 to March. Those drugs include atorvastatin (for high cholesterol), levothyroxine (for hypothyroidism) and lisinopril (for high blood pressure).
Tori Marsh, part of the GoodRx research team, which conducted the analysis, said it has not been determined why exactly prescription drugs cost more in some cities than others, but there appears to be some correlation between a city’s overall cost of living and the cost of drugs there.
Researchers also theorize that cities such as San Francisco that don’t have as many big-box retailers like Walmart, which often offer cheaper generic drugs, may see higher prices. Pharmacy markups are also a likely factor.
San Francisco was also the second most expensive city for prescription drugs last year, when GoodRx did a similar analysis, with costs nearly 13% higher than the national average.
“This data highlights the nonsensical and variable nature of drug pricing,” Marsh wrote in a blog post on the 2018 findings, citing vast differences in costs even when comparing cities relatively close to one another, like Cleveland (2.5% higher than the national average) and Columbus (22% lower than the national average). “How is it that cities in the same state could have such wildly different pricing for prescription drugs?”
Few other consumer goods vary so much in pricing for the exact some product — an inconsistency arising from the lack of transparency and regulation in the drug pricing system, experts said. Drug manufacturers, pharmacy benefit managers and insurance companies negotiate among themselves to determine how much each will pay and receive for certain drugs, and those arrangements are considered proprietary.
This leads to major price differences not just city by city, but pharmacy by pharmacy
“This the nonsensical data highlights and variable nature of drug pricing.” Tori Marsh, GoodRx researcher
within the same few blocks, for the same drug. A recent study found that between 2011 and 2016, the prices set by 13 major drug manufacturers went up 15% each year, but the amount the manufacturers got back only went up 2.7% each year because much of the money went to intermediaries, the pharmacy benefit managers, said Dr. Kevin Schulman, a Stanford health economist and lead author of the study. The consumer is often paying the inflated price.
“There’s not a lot of transparency at all in the market,” Schulman said. “Some of the times, the cash prices can be pretty outrageous. They may not at all be related to how much the product actually cost the pharmacy. You might go to your local pharmacy and see the cash price is $100 more than it was at Walmart” in the same area.
Lisa Kroon, a professor and chair of the Department of Clinical Pharmacy at the UCSF School of Pharmacy, said it’s important that consumers compare prices at multiple drugstores. Many pharmacy chains offer discounts or inexpensive generics for common medicines treating diabetes and blood pressure for patients who don’t have insurance or whose insurance plan covers very little.
“Definitely shop around because you may call one pharmacy and another pharmacy might give you a different number,” she said.
If prescriptions are so costly that they are out of reach, patients can ask their doctor and pharmacist if there are any similar lower cost alternatives, such as a different pill strength, she said.
“Really talk to the pharmacist and don’t be afraid to say, ‘This cost is too prohibitive; is there anything else?’ ” Kroon said. “Ask questions. We believe the role of the pharmacist, in addition to making sure people are on the right medication, is to help them be on the medicine they can actually afford and take because if they can’t afford it, they’re not going to take it.”