Wal-Mart to Sell Generic Drugs at a Discount

By Staff Report

Sep. 21, 2006

Wal-Mart announced today that it will sell some generic drugs for $4 per 30-day prescription to employees and customers, including people without health insurance, at the company’s pharmacies.

Wal-Mart, based in Bentonville, Arkansas, says it will launch the program at its 65 stores in the Tampa, Florida, area and expand it to all stores statewide beginning in January, and to as many states as possible next year.

“This will help all of our customers and all of our associates from all walks of life,” says Bill Simon, an executive vice president. “Associates” are Wal-Mart employees.

Whether this move will benefit employers footing the bill, however, appears unlikely. Any savings will be indirect.

Coming from the largest retailer in the world, the effort could pressure other chain pharmacies to lower the prices of similar prescription drugs, creating market competition that could help wean patients off expensive brand-name drugs.

“Wal-Mart is a smart organization and they are not going to depend on more conventional health care organizations that have been raking purchasers over the coals” to create a more robust market for consumers, says Brian Klepper, president of the Center for Practical Health Reform.

Such an occurrence would coincide with the expiration of a bevy of patents on brand-name drugs that is ushering a wave of generic drugs onto the market that could also lower costs and increase the use of generic drugs.

“This is going to help employers somewhat,” says Paul Ginsburg, president of the Center for Studying Health System Change. “To the degree that employees are going to pay less for generic prescriptions will help employers move more of their employees to generic drugs.”

The way the program will work is simple. The drugs will cost $4 per prescription for those with or without health insurance. Employers could conceivably save money if their employers choose not to file insurance information with Wal-Mart. Simon said the company would not bill health plans for the difference between normal co-pays, which range from $10 to $50, and the $4 that Wal-Mart charges.

The list of 291 generic drugs offered for $4 includes antibiotics like Amoxycillin and drugs for chronic illnesses such as asthma (Albuterol), high blood pressure (Lisinopril) and diabetes (Metformin). The savings for uninsured customers normally forced to pay the average retail price could be as high as 67 percent, Simon says. The 291 drugs represent one of every five prescriptions Wal-Mart fills.

The move will likely to take political pressure off of Wal-Mart to make its health plans more widely available to its employees since those without insurance pay the same for certain drugs as those who are covered. Cheaper drugs could bring more customers to Wal-Mart’s in-store clinics that treat basic illnesses.

Simon says Wal-Mart was not in discussions with manufacturers to get lower prices on the drugs. The company said it could deliver reduced prices cost-effectively by increasing sales volume and by employing the highly efficient technical and logistics infrastructure it uses to sell other items at deep discounts.

“We are geared up to deal with a significant volume increase,” Simon told reporters during a conference call. “We expect a lot of folks will be interested in this program.”

Wal-Mart CEO Lee Scott, who has long criticized the inefficiency of health care markets, hinted earlier this year that he would like to harness Wal-Mart’s efficiency to help bring down health care costs for consumers.

Jeremy Smerd

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