To Get the Lowest Drug Prices It Pays to Shop Around

Consumer Reports has no financial relationship with advertisers on this site.

A Consumer Reports pricing investigation has found that when it comes to prescription drugs, it really pays to shop around.

CR’s secret shoppers called more than 150 pharmacies in six metropolitan regions around the country from midsummer through early fall, seeking quotes for their discounted retail or “cash” price for a one-month supply of five commonly prescribed drugs. The list included the generic versions of Actos, for diabetes; Celebrex, for pain; Cymbalta, for depression; Lipitor, for high cholesterol; and Plavix, a blood thinner.

The range of discounted retail prices CR found at those stores—representing several dozen national retailers, grocery stores, and independent pharmacies—was stunning. While the lowest-priced retailer rang up to just under $100 for the five-drug “market basket,” the two highest-priced national retailers—CVS and Kmart—registered total prices closer to $1,000.

When we asked CVS and Kmart for comment, both said they have in-store programs that can help bring those prices down. And Kmart said it has since changed its pricing strategy to emphasize “everyday low” prices. The new prices a Kmart spokesperson quoted for our market basket would total about $550. (But when we went to spot-check the company’s updated pricing this week, we got mixed results. More on this later.)

The lowest overall pricing our shoppers found for the five drugs was $95 at the online-only pharmacy HealthWarehouse.com. Among walk-in stores, Costco offered the best-priced deals: $117 for the entire market basket.

The results from our shopping exercise reveal an important insight: When it comes to prescription drugs, you may be better off paying cash instead of using your insurance. It also reinforces why it’s so important to shop around and ask a lot of questions, including “What is the lowest possible price for this drug?”

Other broad takeaways include inquiring about in-store coupons and searching online at free coupon-aggregating sites. And consider buying your drugs at warehouse stores such as Costco and Sam’s Club, the online pharmacy HealthWarehouse.com, and independent drugstores, all of which offered competitive pricing to our secret shoppers. (See more advice on how to lower your drug costs.) 

“Using this information to shop around for meds can save consumers money,” says Orly Avitzur, M.D., Consumer Reports’ medical director. “And with people often struggling to afford the drugs they need, it’s more important now than ever.” (See our companion article, “Americans Say They Are Suffering as Drug Costs Continue to Rise.”) 

What We Found

Our secret shoppers were instructed to ask for the discounted retail or cash price, for consistency. The pricing patterns they found were repeated in each of the locations we looked at—including urban, suburban, and rural areas—for each of the drugs we priced.

CR found that prices quoted for the same drug also varied widely even among retail outlets within the same geographical area. In Dallas, for example, Walgreens quoted $220 for a month’s supply of generic Cymbalta compared with nearby prices of $174 at the pharmacy in a Tom Thumb supermarket, $40 at a Costco, and $23 at Avita Pharmacy, an independent drugstore. Walgreens’ price was nearly 10 times as high as the lowest quote received. 

Paying Cash Can Be Cheaper Than Using Insurance

Shopping around for your prescription drugs is clearly important if you’re among the 9 percent of U.S. adults, or roughly 28 million people, who still don’t have health insurance and have to pay drug and other healthcare costs on your own, CR’s Avitzur says.

But comparison shopping can be worth the time and effort even when you are insured. Our shoppers found that the lowest cash price in pharmacies can sometimes be a better deal than using insurance and paying the co-pay. That’s true even if you get your meds through a Medicare Part D plan. And it’s especially true in the case of drugs that are not covered well, or at all, by your insurance, requiring you to pay high co-pays or a high percentage of the drugs’ list price.

Shopping around can also be valuable if you have a high-deductible health plan. Those plans require families to pay $2,600 or more out of pocket toward a deductible before their insurance kicks in. Until that threshold is reached, consumers on these plans are often stuck paying a higher price for drugs, sometimes even full retail. According to the Centers for Disease Control and Prevention, nearly 40 percent of adults younger than 65 who get insurance through their employer had high-deductible plans in 2016.

While comparison shopping for drugs can help, a third of people in a recent nationally representative CR survey of 1,200 people who take at least one prescription drug said they simply paid the higher price. Only 22 percent said they comparison shopped to see whether they could get a better deal.

Why Prices Vary so Much

How much you pay for a prescription drug has little to do with the usual principles of supply and demand that govern other consumer purchases, from toothpaste to cars, says Stephen Schondelmeyer, Ph.D., a professor of pharmaceutical economics at the University of Minnesota. Instead, the prices are set based on byzantine, behind-the-scene contracts negotiated between multiple players in the prescription drug industry.

That includes retail pharmacies, health insurance companies, drug manufacturers, and pharmacy benefit managers—companies that broker deals between insurers and drug manufacturers.

Prices vary so much, in part, because contracts between pharmacy benefit managers and pharmacies can differ from retailer to retailer, says Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA).

And because pharmacies typically don’t know how much insurance companies will reimburse them for a particular medication, they often set high cash prices to try to get the highest possible payment from insurers, Hoey says. For example, if a pharmacy quotes a consumer a cash price of $10 for a medication, the insurance company might object if the pharmacy retailer bills the insurer more than that.

But the details of all the behind-the-scenes maneuvering remain largely hidden from consumers and physicians. Schondelmeyer notes that after a doctor visit you are sent an explanation of benefits (EOB) that shows your costs and how much your insurer paid. But there’s often no equivalent accounting for prescription drugs. “The sad part is even consumers who try to find the true cost in this crazy market just can’t do it,” he says.

Once Kmart told us about their revised pricing strategy this week, we had our secret shoppers again call the same Kmart stores in our study for an updated spot-check. Two of the five drugs—generic Lipitor and Plavix—matched the new lower price Kmart had given us, but prices given for generic Cymbalta and Actos literally changed overnight from the higher secret shopper original price to Kmart’s new quoted lower one. And the fifth drug, generic Celebrex, remained unchanged, at $200, from our original shopping study.

CVS's spokesperson Mike DeAngelis told Consumer Reports that CVS makes “every effort to ensure our retail prices for prescription drugs are competitive in the marketplace.” He also said that CR’s pricing survey failed to take into account the “various value and discount programs available at most pharmacies for cash-paying customers.” He says 75 percent of prescriptions filled at CVS cost patients $10 or less. (Note that CVS now also owns pharmacies in Target stores.)

But DeAngelis also pointed out that “due to varying business models and operational costs, there may be price differences for some medication between a retail pharmacy such as CVS Pharmacy and other types of businesses that operate pharmacies.”

Costco was on the lower end of the market-basket price quotes to our shoppers. Victor Curtis, R.Ph., senior vice president for pharmacy at Costco, says that pharmacy chain can offer such low prices—and still make a profit—because the company offers a no-frills experience: Hours are limited during the week, stores are closed on Sundays, there’s no 24-hour drive-thru, and a centralized next-day fill center may mean you get some scripts the next day.

This strategy attracts shoppers who pay entirely out of pocket—30 percent of its prescriptions are paid for by consumers themselves without going through insurance. That compares with the industry standard of about 5 percent, experts say.

One barrier to learning about lower cash prices can be your own insurance company. That’s because contracts between pharmacies and insurers or pharmacy benefit managers sometimes have so-called gag clauses that forbid or discourage pharmacists from letting customers know that they could get a lower retail price by paying without their insurance, says Hoey at the NCPA.

Several states—including Arkansas, Connecticut, Georgia, Maine, Minnesota, Nevada, North Carolina, and North Dakota—have passed laws rendering these types of gag clauses illegal, according to the NCPA.  

How to Shop Around and Save

Our secret shoppers not only identified which pharmacies tend to have the lowest prices but also uncovered several other surprising and effective strategies to lower drug costs.

Ask for the “lowest possible price.” This would be the lowest price the pharmacy can offer without going through your insurance, and it could be less than your co-pay. By taking the initiative and asking that question, it may allow the pharmacist to bypass the gag clause that might otherwise prevent such pricing transparency. Just remember that when you don’t use your insurance, the money you spend is unlikely to count toward your deductible or out-of-pocket maximum.

Check out buying clubs such as Costco and Sam’s Club. You don’t have to be a member to get the prices our secret shoppers found. But if you do pay the fees to join—$60 at Costco and $100 at Sam’s Club—your drug costs could be even lower. A Sam’s Club in Dallas told our shopper that with a Sam’s Club Plus Membership, generic Actos would be free, generic Plavix and Lipitor would cost $10, and there can be extra savings for generic versions of many drugs.

Consider the online pharmacy HealthWarehouse.com. It had the lowest prices for our market basket of meds. If you try other websites, look for those that operate in the U.S. and end in “.pharmacy” or that carry the VIPPS (Verified Internet Pharmacy Practice Site) symbol. That indicates that an online pharmacy meets strict standards set by the National Association of Boards of Pharmacy. (Note that the VIPPS program is being phased out in favor of requiring verified pharmacies to include the .pharmacy domain name.)  

Ask for in-store discounts. Many pharmacy chains—including CVS and Rite Aid—that had high list prices in our price check say that they provide access to discounted drugs to in-store customers. For example, Rite Aid offers hundreds of generic drugs for as low as $10 for a 30-day supply and $16 for 90 days. But some of these discount programs can’t be used in conjunction with other insurance, including Medicare.

Search for coupons online. Pharmacists sometimes told our shoppers that they would be better off getting coupons from online services such as Blink Health and GoodRx. These sites aggregate competing costs, and some even offer a coupon for each store, so you can compare prices—saving you time. Even better, these services are free.

Investigate independents. Locally owned pharmacies offered some of the lowest prices our shoppers found—but also some of the highest. You won’t know for certain until you call to find out. Case in point: The price of a 30-day supply of pioglitazone (generic Actos) at the independents we called ranged from $10 to $493.

Don’t dismiss supermarket pharmacies. As with independent pharmacies, some supermarket drugstores offered really competitive prices—but others had very high ones. So do see what your local grocery store pharmacy would charge, but check other nearby pharmacies, too.

Once you find a pharmacy, stick with it. Shop around, and once you settle on a pharmacy that’s consistently offering the best deal on medication, fill all your prescriptions at that retailer. Why? Because buying all your medication from the same drugstore makes it easier for pharmacists to spot potentially dangerous drug interactions and other safety concerns, says Consumer Reports’ Avitzur. But if you notice your drug costs starting to go up noticeably, it may be time to comparison shop again.  

Editor’s Note: This special report and supporting materials were made possible by a grant from the state Attorney General Consumer and Prescriber Education Grant Program, which is funded by a multistate settlement of consumer fraud claims regarding the marketing of the prescription drug Neurontin (gabapentin). 

Additional reporting by Rachel Rabkin Peachman and Lisa Gill.

More from Consumer Reports:
Top pick tires for 2016
Best used cars for $25,000 and less
7 best mattresses for couples

Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2017, Consumer Reports, Inc.