22 April 2011

Lamar W. Hankins : Price Gouging at Your Corner Drug Store

Product placement! Display at a CVS drug store. Photo by gbeckley /The Consumerist.

Consumer alert!
Price gouging at your corner
convenience drug stores

By Lamar W. Hankins / The Rag Blog / April 22, 2011

The press coverage this past week of the 2007 CVS-Caremark merger that is being characterized as anti-competitive by several consumer organizations -- Consumer Federation of America, Community Catalyst, Consumers Union, National Legislative Association on Prescription Drug Prices (NLARx) and U.S. PIRG -- piqued my interest because I was in the midst of some consumer research about CVS’s high prices for non-prescription products.

Long ago, I stopped using the CVS card that was issued to me and which is used by CVS to track consumer preferences and provide coupons for discounts on certain products, most of which I found had an expiration before I was ready to use them. I decided that I didn’t want CVS tracking my purchases so easily, given the loss of privacy we have generally in this high-tech consumer society.

As it turns out, the merger controversy may have nothing to do with what I discovered in my research, but it is indicative of the tactics of many, if not most, retail corporations to increase their profits.

Most consumers may know that the layout of stores is intended to encourage impulse purchases of items on which the stores enjoy greater profits than on other items. The special displays on rows and aisles, the displays at the ends of aisles, and the special displays at checkout counters are all used to increase sales of those items. Product placement on shelves is also used to encourage purchasing. Distributors fight for noticeable and accessible shelving space, whether at drug stores, supermarkets, or other retail outlets.

In an effort to increase profits through its drug plans, Caremark is accused of steering customers to its retail pharmacies where prescription drugs cost more than through its mail-order service. This behavior, which Caremark has denied, is being investigated by the Federal Trade Commission and 24 state attorneys general. But consumers may want to investigate other marketing practices.

I have been a volunteer consumer advocate for nearly 20 years, mostly relating to all things funeral, but I’ve seldom turned my attention to other consumer pricing issues. Quite by accident, I recently learned a consumer lesson that many people on tighter budgets may know about already.

Because I have arthritis, as do 50 million other Americans, my hands often ache at night, waking me up. When I saw a product -- JointFlex -- advertised with a money-back guarantee, I decided to try it. I stopped off at the CVS store on a corner near my house and bought a tube for $20.99. I thought the price was a bit high, but with a money-back guarantee, I decided to give it a try and hold on to my receipt and the box.

Much to my surprise and relief, the product worked. As my first tube of JointFlex was running out, I remembered to buy another tube while I was shopping at HEB one day. I was shocked to find that the HEB price for the same product and quantity was $11.30.

I took both boxes and receipts to the CVS store and asked to speak to the manager. I asked her why JointFlex was so much higher at CVS than at HEB. She didn’t know. She said that the corporate office tells her what prices to charge and she doesn’t ask questions.

And the winner: HEB ("A Texas Tradition"). Image from Icemancast.com.

That experience gave me an idea. I priced another 11 name-brand items normally found at drug stores and selected at random. After noting the prices at CVS, I went to HEB to price the same items. HEB was significantly cheaper on every item. I decided to check out the prices on the same items at Walgreens and found that Walgreens is about 7% cheaper than CVS for the same items -- still no bargain in comparison to HEB. Here is what I found about the prices at CVS and HEB:

Neosporin (first aid ointment), .5 oz: CVS-$6.39..... HEB-$3.86
Bactine Cleansing Spray, 5 oz: CVS-$8.79..... HEB-$4.96
Visine for Contacts, 1/2 fl.oz: CVS-$4.99..... HEB-$3.62
Band-Aid Plastic Strips, 60 strips: CVS-$3.59.... HEB-$1.96
Johnson’s Body Care Lotion, 14 oz: CVS-$6.49.... HEB-$3.97
Tums, assorted fruit, 150 chewable tablet: CVS-$5.49..... HEB-$3.68
Pepto Bismol-original, 12 oz: CVS-$5.99..... HEB-$4.92
Phillips Milk of Magnesia-original, 12 oz: CVS-$6.29..... HEB-$4.16
Aleve Liquid Gels, 40 gels: CVS-$7.99..... HEB-$6.48
Bayer Aspirin, 100 coated tablets: CVS-$6.46..... HEB-$5.88
Children’s Claritin syrup, grape flavor, 4 oz: CVS-$11.29..... HEB-$9.22
JointFlex arthritis cream, 4 oz: CVS-$20.99..... HEB-$11.30

CVS charges $94.75 for the twelve items. HEB charges $64.01, for a savings of about 33%.

Convenience drug stores appear to be much like convenience grocery stores. They may have a few low prices to get you in the store, but most other items are overpriced as compared to a supermarket (or, at least, some supermarkets). Of course, if you are willing to pay more for the convenience, which all of us are occasionally, we have to give up some money to get that convenience.

The moral of my research project may be this: buy your prescriptions wherever you please, but be aware that other drug store products are likely to be overpriced at the corner convenience drug store.

As I am approaching living on a fixed income as a retiree, I have become more concerned about costs. You can be sure that I won’t be making any more convenience drug store purchases unless I’m in a real hurry.

[Lamar W. Hankins, a former San Marcos, Texas, city attorney, is also a columnist for the San Marcos Mercury. This article © Freethought San Marcos, Lamar W. Hankins.]

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