When it comes to the mail order drug business, economies of scale matter. The larger the supplier, the more leverage they have in determining the prices. That is why, more and more, large retailers and online companies are dominating the mail order market.
It’s the reason why online giant Amazon has begun to test the waters of this lucrative side of drug sales.
Mail order drugs account for about $106 billion in prescription sales, out of a total drug market of $465 billion. All the major drug store companies, such as CVS and Walgreens, have mail order service, in addition to companies like Express Scripts, which offer online service.
Express Scripts Holding Company is among the largest in the United States, ranking at number 22, with revenues over $100 billion.
Big box stores like Costco and Walmart are beginning to dominate the market for drug sales, mostly because they offer one-stop shopping for people who buy many other household goods at these giant retailers.
Mail order pharmacy services generally work through an insurance company’s pharmacy benefits manager (PBM). Some of these big PBMs, like CVS Caremark and Express Scripts, buy medications in bulk from the manufacturers, which can reduce the copays for some medications. These reductions occur more often for drugs that people take regularly for chronic conditions.
If you have insurance through an employer, they more than likely will have a mail order choice for employees. They offer the mail order option because the employer pays less when employees use this alternative.
Big box stores are becoming major players in the mail order market also because with their size, they can offer big discounts on hundreds of generics if a person is willing to pay the retail price and not use insurance. Places like Costco, Target and Walmart offer these discounts, which enable people to buy the generics for only a few cents a pill. They do this to attract more customers. And this alternative can be very attractive for people with no insurance or minimal coverage.
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