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Wal-Mart drops drugs to $4

That’s how much a 30-day supply of many generic prescriptions will cost in a program being tested in bay area stores starting today.

By MARK ALBRIGHT and KRIS HUNDLEY
Published September 21, 2006

Medicines to be offered (PDF)

TAMPA — The retail giant whose relentless push for lower prices has brought it nearly as many foes as friends announced a program Thursday to move deep into the high-cost world of prescription medications.

Wal-Mart Stores Inc. unveiled a test that begins today in the Tampa Bay area to dramatically cut prices on 291 commonly used generic drugs to $4 for a 30-day supply.

“That’s right. Four dollars,’’ said Bill Simon, executive vice president of the discount giant’s $20-billion-a-year pharmacy unit. “People are struggling today with the high cost of health care and prescriptions and this offers access to treatment that many cannot afford.’’

Initially, the change is a test in  the pharmacies of all 65 Wal-Mart stores, Neighborhood Markets and Sam’s Clubs in West Central Florida. The chain plans to go statewide with the program in early 2007, then spread the pricing to most states after that, depending on the response.

Though the program is expected to be particularly attractive to the uninsured, insurance will be accepted. Some people with insurance may even find themselves paying cash because Wal-Mart’s prices are lower than their co-payments.

The drugs include several treatments for common conditions including blood pressure, diabetes, infections, post menopausal symptoms, allergies, stomach acid and sleep disorders.

There are some noticeable gaps on Wal-Mart’s list, however, which is limited mostly to older generics. The alternative to Prozac is available, but not for Paxil.   And no generic equivalents of popular cholesterol-lowering drugs appear on the $4 list.

Wal-Mart, which has often sold selected goods at a loss to get people to shop in its stores, insisted that was not the case this time. Wal-Mart cited its more efficient distribution, as well the generic drug industry’s desire to gain market share, for making such barebones pricing possible.

Last year, generics accounted for 57 percent of all prescriptions sold in the United States and 13 percent of sales, according to IMS Health, a healthcare information company in Plymouth Meeting, Pa.

But John Ransom, analyst with Raymond James & Associates in St. Petersburg, characterized Wal-Mart’s initiative as a loss leader intended to boost stagnant pharmacy sales at the nation’s largest retailer. Discounters like Wal-Mart account for about 20 percent of the prescription drug market, with major retail drug chains accounting for about 40 percent. Ransom said the biggest likely losers to Wal-Mart’s gambit are other discounters like Costco.

“There’s clearly a price war for the cash-paying customer,’’ he said. “But 95 percent of a retail drugstore’s pharmacy business is people with $5 or $10 insurance co-pays. And this may not be enough to get the insured patient to switch.’’

That’s what the folks at Walgreens, the nation’s largest drug retailer, are hoping. The Deerfield, Ill., chain filled over 500-million prescriptions last year, about 60 percent of which were generic; 95 percent of their prescription customers had insurance. Michael Polzin, Walgreens’ spokesman, said the chain has no intention of matching Wal-Mart’s $4 price.

“We’re doubtful this will drive individual behavior based on our past experience,’’ he said. “Our convenience and location have proven to be a bigger factor. So we don’t see this having a significant impact on us.’’

Wal-Mart’s heavily publicized announcement, made by corporate executives in a Tampa store on Thursday morning, was also dismissed by the retailer’s critics.

”While lowering prescription drug costs is a good thing, Wal-Mart cruelly ignores the fact that it fails to provide company health care to over half of its employees,’’ a statement from WakeUpWalMart said.

But the move was welcomed by Wal-Mart shoppers like Pat Sullivan, a 55-year-old Massachusetts police officer who retired to Tampa on disability 16 years ago.

“It’s a great deal coming at a time when my insurance coverage ran out for the rest of the year, so I faced the option of paying $100 a month or cutting pills in half and rationing them,’’ he said.

Wal-Mart picked the Tampa Bay area for the high-profile launch because of the area’s large population of retirees, moderate-income working families and uninsured people, said Ronny Hayes, the company’s regional vice president. Florida has an estimated 2.7-million uninsured.

Wal-Mart figures the $4 prescriptions will appeal as well to seniors caught in the Medicare Part D doughnut hole, who must pay out of pocket for their drugs. Maureen Kelly, director of the West Central Florida Area Agency on Aging, said it will also help fixed-income seniors who stopped taking prescribed medications because they cannot afford them.

“I’m certainly going to check it out with my doctor,’’ said Carlos Toro, a 66-year-old retiree vacationing in Tampa who pays $190 a month for brand name blood pressure medications.

The store pharmacy staff has been trained to suggest generic equivalents for brand name prescriptions, but recommend patients ask their doctors first about the suitability.

Wal-Mart said it is working to expand its list of low-cost generics. While some of them, like the popular antibiotic amoxicillin, will only be dropping a few dollars in price, others will be substantially reduced. Lisinopril, a popular blood pressure medicine, sells on the Web site www.drugstore.com for $53.32 for a 30 day supply of 10 milligram tablets compared to $4 at Wal-Mart.

“There are many in here that used to cost $10 to $20 and more for a 30-supply,’’ said Ron McCormick, pharmacy manager at the Wal-Mart on Gunn Highway in Tampa.

Some politicians lauded Wal-Mart taking a lead on the issue.

“This act of good corporate citizenship will help consumers manage health care costs,’’ said Gov. Jeb Bush.

“Fifty bucks for a year’s supply of prescription drugs is a pretty darn good deal for consumers,’’ said Sen. Bill Nelson, D-Fla. “Because Wal-Mart has the ability to shape the market, maybe other retailers will follow suit.’’

Mark Albright can be reached at albright@sptimes.com or (727)893-8252. Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified September 21, 2006, 21:31:53]