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Wal-Mart Expands Its Generic Drug Discounts

$4 Pricing Will Go Nationwide

October 6, 2006

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Wal-Mart says it is expanding its program to sell 300 generic prescription drugs for $4 because of the enthusiastic reception in the Tampa Bay area it was kicked off last month.

The company originally said it would expand the program to all of Florida by early next year if demand justified it. Now it says it will go statewide with the cut-rate pricing today while expanding the list of drugs to 314 and hopes to take the program nationwide by the end of the year.

The list has been expanded to include medicines such as the oncology drug Megestrol and Lovastatin, which is used to treat cholesterol. The list of $4 prescription medications now represents nearly 30 percent of prescriptions currently dispensed in the 235 Wal-Mart, Neighborhood Market and Sam's Club pharmacies throughout Florida, the company said.

"This program makes everyone at Wal-Mart proud. It enables us to respond to the needs of our customers who have struggled far too long with the high cost of prescriptions," said Wal-Mart President and CEO Lee Scott.

Target has said it would match the discounts at its stores. Walgreen, the nation's pharmacy chain, has said it will not cut prices, noting that nearly all of its customers are enrolled in prescription drug coverage.

Bill Simon, executive vice president of the Professional Services Division for Wal-Mart, said the response in the Tampa Bay, Fla. test market has been considerable, with 36,000 new prescriptions filled in the ten days after the September 21, 2006 launch.

For specific medications, the company estimates the following approximate savings to Florida Wal-Mart and Sam’s Club customers and members under the program, based on current average retail prices from myfloridarx.com:

• Fluoxetine (20 mg), an antidepressant: about $210,000 monthly and $2.5 million annually on this medication.

• Lisinopril (10 mg), used to treat high blood pressure: about $150,000 monthly and $1.8 million annually on this medication.

• Atenolol (25 mg), a beta blocker: about $75,000 monthly and $900,000 annually on this medication.

The prescriptions included in the program represent many of the most commonly prescribed medications in a wide range of therapeutic categories. Generics contain the same high quality active ingredients as their brand-name counterparts and are equally effective but cost significantly less. Wal-Mart continues to use the same suppliers as before the launch of the $4 generic prescription program.

Not everyone welcomes Wal-Mart's price cutting. Critics call it a marketing move, designed to draw more pharmacy business away from independently owned drug stores. They say generic drugs are already cheap and aren't nearly the burden name-brand drugs are.

Despite the critics, Wal-Mart's cost-cutting has spurred other actions that have injected new life into the retail drug market.

Although complaining bitterly, locally-owned pharmacies are beginning to shave prices on their generics while other major chains study Wal-Mart's action.

Congress, frightened by seniors' anger over the complex Medicare Part D program, has decided to allow consumers to buy drugs in Canada and bring them home. And the U.S. Customs Service has announced it will stop seizing prescription drugs being mailed to individuals from Canadian pharmacies.

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