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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
36 QJ G u 4) .3 o O >H >-
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Pricing
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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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68
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
6 9
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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
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Appendix E
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