CVS is a pharmacy and retail corporation founded in 1963 and formerly called Consumer Value Stores.
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The company currently operates approximately 9,900 stores.
The retail pharmacy chain is the largest in the United States, ahead of its primary competitor, Walgreens.
Like many other drugstores, they not only sell prescription drugs but over-the-counter medications and a variety of other items that are often found in groceries and general retail establishments.
Whether you’re buying snacks, cosmetics, or medications, you may have already discovered that CVS can be a bit on the expensive side.
Why Is CVS So Expensive? (Top 10 Reasons)
1. Prescription Drugs Are Expensive
It’s no secret that prescription drugs and even many over-the-counter medications are extremely expensive in the United States.
CVS is the largest retail prescription drug company in the country.
CVS is so large that a few years ago they acquired Target.
This increased the number of pharmacies they have and their ability to charge what they want for prescription drugs.
Pharmacies bargain with Pharmacy Benefit Managers (PBMs) and insurance companies to determine the cost of their prescription drugs.
The larger pharmacies, such as CVS, have greater bargaining power when making the deals that determine how much medications will cost.
PBMs often use certain formulas to determine what the costs will be on particular drugs.
Co-payments are normally broken down into Tiers.
- Tier 1 generally includes inexpensive generics.
- Tier 2 includes more expensive generic brands and preferred brands.
- Tier 3 includes non-preferred brands.
- Tier 4 is for specialty drugs.
It’s also important to know that what an individual’s healthcare plan will pay for different types of drugs varies enormously from pharmacy to pharmacy.
It also depends on whether the individual is getting a name-brand drug or paying for a generic version.
Generics are normally cheaper but do cost more at retail pharmacies such as CVS.
The large supermarkets and retail stores charge less for generic drugs than the drugstores.
The way PBMs, insurance companies, and drugstores decide how much medicines cost can be confusing for the average person.
There is also a lack of transparency.
This often results in a wide range of price differentials between drugstores and other retailers that sell prescriptions.
You won’t have any idea what a drug actually costs the pharmacy to purchase.
You only know what they’re charging you.
They may be giving you a good deal or making an enormous profit.
How can CVS or any other store get away with this?
There isn’t any government regulation on drug prices in the United States.
This is one of the reasons CVS is so expensive, particularly when it comes to prescription drug costs.
It’s especially expensive for those who don’t have insurance and must pay all medication costs out of pocket.
2. They Employ High-Level Professionals
CVS is primarily a pharmacy, which means they will normally have a pharmacist on duty as well as several pharmacy technicians.
Becoming a pharmacist requires several years of college undergrad work taking courses such as chemistry and microbiology.
Most pharmacists will complete four years of undergrad study and then three or four years in a pharmacy graduate school.
Then they will need to complete internships and residency programs, and finally, they’ll need to pass licensing exams.
According to the United States Bureau of Labor Statistics, the median pay for a pharmacist in 2021 was $128,570 annually.
Even though places like Walmart will pay their pharmacists and pharmacy techs comparable salaries, Walmarts are much larger stores and can more easily absorb these costs and still provide low prices.
Most pharmacies, depending on size, will need to employ several pharmacy technicians as well.
While these professionals do not make nearly as much as a pharmacist will, they do make an above-average income, and many drugstores will have two or three on duty as well as the pharmacist.
Besides the cashiers ringing up items at the front of the store, every CVS will usually have a pharmacist and several pharmacy techs on duty during most shifts.
The salaries and any benefits the employees may receive will add to the overall cost of operating the drugstore.
In order to compensate for paying competent professionals to make sure prescriptions are correctly filled, prices in the store will often be higher than the average retail establishment.
3. They Pay Higher Wages
CVS doesn’t just have to pay their pharmacist and pharmacy technicians higher salaries.
They generally pay higher wages than other retailers for all their employees.
According to Indeed, CVS starts their cashiers out at a higher wage than even Walmart does.
Retail sales associates also earn more at CVS than they do at Walmart.
In August 2021, CVS officially raised its starting minimum wage to $15 an hour for every entry-level employee.
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While salaries for those working in retail are rising across the country, many big retailers still pay their new employees less than $15 per hour.
The actual pay rate will vary from company to company and state to state.
Higher-level positions will pay more and those individuals who have been with the company for a long enough time to receive a raise will make more.
Even though there are thousands of CVS drugstores in operation, each store is relatively small compared to big retailers such as Walmart and Target.
Paying higher wages and providing benefits for all of these employees means that the cost of everything from milk to shampoo will be more expensive for shoppers.
4. They Encourage People To Join Their Rewards Program
When consumers become a member of the ExtraCare Card program, they receive several benefits, including Extra Bucks rewards that can add up over time.
They also get the ability to save on weekly sale items and receive text and email alerts regarding personalized offers.
Higher prices are meant to encourage shoppers to take part in the ExtraCare Card Program.
CVS provides an incentive for shoppers to sign up for their card program so they can get discounts and avoid paying the regular high prices.
Once customers start using the card program, they get used to receiving better deals and discounts, at least on certain items.
This is one of the ways that CVS keeps customers coming back.
These loyalty programs can save customers a lot if they regularly use their cards, keep track of coupons, and sometimes buy two or more items at once.
The problem is that it’s difficult to do all that regularly.
Customers get used to coming to the same store because they can get good deals when they keep their coupons organized and plan what they need to buy.
When they don’t and they’re in a hurry, they’ll pay the higher prices, and the store will make a tidy profit.
5. They Sell Alcohol
CVS has not always sold alcohol.
Now, many CVS stores have quite an extensive selection of beer, wine, and hard liquor.
They even sell some pricey brands, such as Crown Royal, that often remain behind the locked glass.
Most stores sell a wide selection of wines and even specialty beers.
Pretty much every type of alcohol that you would normally find in the larger supermarkets is available at your corner CVS store.
Selling alcohol normally requires a special license, and those types of licenses aren’t cheap.
Each state has its particular laws regarding who can apply for a liquor license and how difficult it is to obtain one.
In Indiana, for example, the lawmakers put a cap on the number of licenses for liquor that they will issue.
If there are already a lot of licenses in a certain area, it may not be easy to get one.
A business may have to wait or even buy one from another business.
There are also different types of liquor licenses.
Some are for liquor stores while others are needed for restaurants, hotels, grocery stores, and drug stores.
The time and cost that goes into applying and paying for a liquor license is one more reason that CVS is more expensive.
6. They Don’t Specialize
Besides pharmaceuticals, CVS doesn’t specialize in any particular items.
Shoppers will find everything from hair clips and lipstick to potato chips and different brands of aspirin.
There isn’t, however, one specific type of item that CVS emphasizes over all the others.
When a company doesn’t specialize in one particular area in their retail stores, they may not have the bargaining power to get really good deals on items from their suppliers.
Home Depot, for example, specializes in home improvement, and will often be able to get discounts on items they regularly purchase.
Larger retailers have much more space in their stores and can buy in bulk.
Even though CVS has lots of stores, transporting items between the stores is expensive, especially with rising fuel costs.
Bringing just a few items to each store is going to cost more.
Each store must then pass on the costs to consumers.
7. One Stop Shopping
Even though the store is small, pretty much everything a customer is looking for can be found in a CVS.
Do you need to pick up a gallon of milk or a box of cereal?
CVS stocks these items.
If you want to get a beach chair, toys for the kids, and a birthday card for Grandma, all of these items can be found at the store as well.
Magazines, toothbrushes, hair clips, and even designer perfume are just a few of the other items most CVS stores carry.
Consumers can also find pet food, bottled water, and a wide selection of candy.
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Most CVS stores keep an ample supply of staples such as bread, milk, and eggs on hand.
Except for fresh produce and meat, you can find nearly everything on your weekly grocery list in a CVS.
If you’re in a bind and don’t have the time or the energy to fight traffic and trudge your way through a massive supermarket, you can get almost everything you and your family might need at your local CVS.
The only drawback is that it will almost certainly cost you more.
8. Open All Hours
Many of the CVS stores are open 24 hours.
Since the Covid pandemic, many grocers and even big-box retailers started closing at night.
They did this so they could spend time cleaning.
Since CVS stores are smaller, they don’t require downtime to keep everything clean and sanitary.
Even if some of the stores aren’t open all night, almost all are open seven days a week.
Many people work odd hours, and they need to purchase items late at night.
Some people, especially parents, will look for over-the-counter medication for a sick child or family member in the middle of the night or on the weekend.
Those who are sick, or taking care of someone who is, will normally be willing to pay higher prices to get what they need at all hours of the day or night.
It’s also often more difficult to get employees to work night or weekend shifts.
Paying employees more to work nights and weekends will contribute to higher prices.
9. Healthier Options
For several years now, CVS has been incorporating healthier snacks and even meal options into its food selections.
CVS is now offering a variety of meatless products and organic name-brand options.
These are meal options that shoppers can find primarily in the frozen section of the store.
Not only can you quickly pop into a CVS to pick up your prescriptions, hand lotion, and a writing tablet, but you can select some healthy meal options for dinner.
They also offer a variety of healthier snacks like nuts and granola bars.
Considering the food section isn’t all that large, there is quite a large selection of granola and healthy snack bars to choose from.
Some of the stores also carry items such as almond butter and dried fruit snacks.
These are the types of items many people would expect to find in a high-end grocery store or at least in a large supermarket.
That you can now find these items in a smaller store is one of the reasons CVS is so expensive.
10. Convenience
The number one reason CVS is so expensive is basically an amalgamation of many of the other reasons.
Many of the previous reasons add up to one word: convenience.
With thousands of stores located throughout the country, most people won’t have to drive very far to find a CVS.
Approximately 71 percent of Americans live within five miles of a CVS store.
Eight out of every 10 Americans are within 10 miles of a CVS.
A lot of people, especially in urban areas, only have to walk a few blocks to find a CVS.
All of this convenience is great, but it doesn’t come without a cost.
With so many stores to operate, it takes the corporation more money to make sure they’re all running effectively.
Each of these conveniently located stores must have a manager, a pharmacist, and several pharmacy techs and cashiers to make sure the store is open and operating, sometimes twenty-four hours a day, seven days a week.
Yes, It’s very convenient to stop at CVS on the way home from work, in the middle of the night if someone is sick, or just if you’re craving some ice cream and chips and don’t want to drive to the suburbs to a larger retailer.
You’ll pay higher prices, however, for this convenience.
CVS, as well as other drugstores, have found that many people are simply willing to pay more if many of the items they’re looking for are all in one place and close to home.
Time is money.
The time it takes to drive to a larger retailer with lower prices just isn’t always worth it to save a few extra dollars.
The time it takes to drive there, find a parking spot, walk through a large store, and then stand in line to pay is more time than many people are willing to spend.
People are busier than ever.
Convenience is the biggest reason CVS is so expensive and will likely remain on the costly side.
How Can You Save Money At CVS?
Even though shopping at CVS can be costly, there are several ways you can save money.
The following are a few tips for saving money at CVS.
- Sign up for the ExtraCare Card: The first step to saving money at CVS is to sign up for the ExtraCare card. You’ll get 2% back on most purchases and $5 worth of Extra Bucks for every 10 prescriptions you have filled.
- Sign up for Email Alerts: This will enable you to receive coupons for various items all year long. If you make a habit of checking and using some of them, you can save even more money.
- Get the CVS App: The app is linked to your ExtraCare card for even more deals and savings.
- Print Online Coupons: If you create an account at cvs.com/extracare/home, you’ll have access to coupons you can print, weekly deals, and even a birthday treat!
- Check out the Weekly Ads: CVS puts out an old-fashioned paper advertisement every week. Of course, to enjoy the benefits of the weekly deals, you need to make sure you’ve signed up for the ExtraCare card.
- Sign up for the ExtraCare Beauty Club: CVS shoppers can save another 10 percent with a 10% off beauty shopping pass. This means $3 in ExtraCare Bucks for every $30 that qualifies as beauty purchases in the program.
- Be Willing to Switch Brands: Loyalty is great, except when it comes to saving money when shopping at drugstores. If you insist on always buying the same shampoo brand or cough syrup brand, it will be much more difficult for you to save money at CVS.
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