Biggest Drugstore Markups: Which Products You're Paying More For
But drugstore markups can lead to serious overspending. At the very least, you could be overpaying for a drug that can be found much cheaper in a generic version. After all, the Food and Drug Administration requires generic medications to have the same active ingredients as the patented medications they replace, so you're buying the same product, but you aren't paying extra for the fancy branding and packaging.
Outside of prescription drugs, which items at a drugstore are you likely to be charged more for?WalletPop spoke with wholesale experts and learned that shoppers also pay a premium for those items found outside the medicine cabinet. Cosmetics, hair accessories and toys are sold at a high markups to ensure that the drugstore can make some money off those items.
"Drugstores fill a need," says Allen Ash, vice president of Almar Sales Co., a distributor to 20 drugstore chains, including CVS and Walgreens. "The majority of their business is filling prescriptions. All of the other businesses (hair care, cosmetics, etc.) are there to supplement the business."
Drugstores aren't willing to take a risk on many of these non-core items, so many require a "guaranteed sale" from the wholesaler, meaning the wholesaler must guarantee a specified markup on the item or agree to take stock back without the retailer paying for it, explains Ash.
"Any product that people weren't walking into the store for, into the pharmacy for, are high markup," Ash says. Hair accessories such as brushes, for example, have a 75% markup, he says.
Yet it's that aisle between the hairbrushes and the pharmacist's station where shoppers take some of the biggest hits. Over-the-counter medications, like antacids, pain relievers and vitamins rank among the highest drugstore markups. Tom Greenhaw, founder of Cashier Live, which provides point-of-sale software to thousands of retailers across the U.S, provided WalletPop with a breakdown of the biggest drugstore markups.
Greenhaw's company aggregated prices from more than 100 pharmacies and drugstores, and came up with a list of products that have the highest average markups. The drugstore markups were determined by using data provided by Cashier Live, which compared the average retail prices with the wholesale prices that the drugstores pay. Markup percentages aren't the same as profit, and don't take into account the overhead: rent, employee pay and other costs of doing business.
Based on experience and working with pharmacies, Greenhaw says that in general it's cheaper to get the over-the-counter products in a generic version from any of the 17,000 independently-owned pharmacies in the U.S. that are mostly in small towns.
Those little chewable Tums and Rolaids that you pop so casually between meals can really add up. A 60-count package of these calcium-containing tummy tamers retails for $10.53 at the stores that Cashier Live surveyed, but costs just $2.11 at wholesale, according to Greenhaw. The tablets are technically vitamins and are listed generically as oyster shell calcium with vitamin D. And though generic versions are available, you're still going to pay a premium for the convenience of fast relief.
Stores can make more profit from selling Bayer and other brand-name aspirins, along with other commonly-used items on this list, because they're in high demand and shoppers are willing to pay more for them, Greenhaw says. According to his data, a 50-count bottle of Bayer that retails at $3.89, actually only costs stores 78 cents wholesale.
Other pain relievers also have high markups at drugstores, although not as much as aspirin, according to Greenhaw's analysis. A 24-count bottle of acetaminophen, which is commonly sold as Tylenol, has a 378% markup -- from 87 cents wholesale to $4.16 retail.
Naproxen, a pain reliever commonly used to relieve arthritis, is sold as the brand name Aleve. A 250-count bottle has a 364% markup -- from a wholesale cost of $2.99 to a retail price of $13.87.
Eating enough oranges (vitamin C) or beans (vitamin B-1) may be cheaper than buying vitamins. A 100-count bottle of vitamin B-1 has a 395% markup, with a $5 retail bottle costing a store $1.01 wholesale. A 100-count bottle of vitamin C has a 382% markup -- from $2.92 wholesale to $14.10 retail.
Nasal Decongestant PE
At $4.23 for a 24-count package of Sudafed, the cost of phenylephrine to relieve a stuffy nose, sinus and ears is almost five times the drugstore's cost of 86 cents wholesale.
For a package of face wash and other acne treatment from Neutrogena, which is a common brand of the medication benzoyl peroxide, the retail cost is $30.51 and the wholesale cost is $6.27.
Bacitracin, a topical ointment used to prevent skin infections from scrapes and cuts, doesn't have a brand name that stands out, but almost any brand in a 1-ounce tube costs just shy of $5 at retail. That's a far cry from the $1.03 you'd pay at wholesale, according to an average amount from Cashier Live data.
Spring is almost here and so is allergy season, but you may want to think twice before heading to the drugstore for some sinus relief. A 20-count package of Claritin, a brand of loratadine used to temporarily relieve symptoms of fever and other allergies, costs $12.36 retail. At wholesale, it's just $2.59.
A three-pack of Trojan condoms is $4.63 retail and $1.02 wholesale. Trojan is such a well-known brand that due to a lack of much competition, drugstores mark up the price a lot without worrying about losing sales. "There are certain products, like Trojan, where you associate that product with that brand," Greenhaw says.
The best way to avoid these high prices is to buy generics at small, independent drugstores, which could bring savings of 10% to 20%, Greenhaw says. At the very least, slow down while shopping at a drugstore and look for the best price without being swayed by the packaging, signs and brand names.
"Sometimes people are just in a rush," he says. "They just grab whatever they're familiar with."
Markup: 150% to 200%
Some drugstores charge more than the suggested retail price printed on the back of a greeting card. It's an item that often has high drugstore markups because it's a last-minute purchase, says Jason Gurwin, CEO of Pushpins, a mobile coupon company that compares data from all of the major drugstore chains. If you've ever run into a drugstore for a card while on the way to a birthday party, you know how expensive these can get.
More on Markups from WalletPop:
Biggest Grocery Store Markups: The Worst Deals in the Aisles
The Real Markup on Mini Bar Snacks and Drinks
Even though hair products such as shampoo have low drugstore markups, hair accessories like brushes make up the difference, says Ash. Drugstores require distributors, such as Almar, to guarantee a 75% markup profit on these items and they can do so because they virtually corner the market.
"If you have a beauty product and you're not in the drugstores, you're out of business," he says.
Ash recommends going to Walmart, Target or other big retailers for cheaper prices on such products.
Not all drugstores sell entry-level jewelry, such as costume jewelry, but those that do mark up their products by as much as 70%, Ash says. Drugstores struggle with selling costume jewelry, because it's less of an impulse buy than a hair accessory, toy or something else.
Most people don't go into a drugstore with a toy purchase atop their shopping list, but having a kid along can increase this impulse buy, Ash says. Drugstores realize that kids being dragged into stores can help drive toy sales, he says.
From lip gloss to nail polish, eye shadow and other beauty items, cosmetics is a high-profit item that drugstores rely on with a high rate of return, Ash says. Customers trust brands and will return to a drugstore because they know the retailer will always have them in stock, he says.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area.