Price Discrimination Rather Than Lack of Transparency Explains Retail Pharmacy Price Variations

Forthcoming in Health and Healthcare in the United States Edited by Holly Fernandez Lynch, I. Glenn Cohen, Carmel Shachar and Barbara J. Evans. Cambridge University Press, Cambridge, ISBN: 978-1108470995

Suffolk University Law School Research Paper No. 19-11

20 Pages Posted: 6 May 2019

See all articles by Marc A. Rodwin

Marc A. Rodwin

Suffolk University Law School; Harvard University - Edmond J. Safra Center for Ethics

Date Written: 2019

Abstract

Policymakers have sought to reduce high prices and price variations by increasing price transparency. We sought to measure retail drug price variations and their relation to transparency. Our survey of six national pharmacies reveals large price variations both among and within pharmacies for consumers purchasing drugs without insurance even while price information was available on line. Pharmacies sold identical medications at up to 6 prices based on various discounts available through phone apps. Within individual pharmacies the difference between the lowest and highest price the pharmacy sold the drug ranged between $14 and $719 for a 30-day prescription. Moreover, medications sold on pet website were sometimes much less expensive than the lowest discounted pharmacy price. We also found that insured consumers sometime pay more out of pocket to purchase drugs due to high copayments than if they purchased medicines without insurance. Marketing practices, price discrimination, and high copayments account for differences in prices and out of pocket consumer spending rather than the lack of price transparency. Policymakers need to consider strategies other than price transparency to reduce pharmacy price variations.

Suggested Citation

Rodwin, Marc A., Price Discrimination Rather Than Lack of Transparency Explains Retail Pharmacy Price Variations (2019). Forthcoming in Health and Healthcare in the United States Edited by Holly Fernandez Lynch, I. Glenn Cohen, Carmel Shachar and Barbara J. Evans. Cambridge University Press, Cambridge, ISBN: 978-1108470995 ; Suffolk University Law School Research Paper No. 19-11. Available at SSRN: https://ssrn.com/abstract=3364636

Marc A. Rodwin (Contact Author)

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