Pharmacy Chains Promote Generic Prescription Drug Discount Programs

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Retail pharmacies "are waging what some consider a generic-drug price war that is threatening margins in a typically high-profit area and reflects the intense competition that drug store chains face in attracting and keeping customers," the Wall Street Journal reports.

According to the Journal, generic drug programs have "proliferated" since Wal-Mart in 2006 began selling a month's supply of many generic prescriptions for $4. Now, large pharmacy chains such as Walgreen, CVS Caremark and Rite Aid have begun to "aggressively promote their discount drug programs ... as the economy declined and competition increased," the Journal reports. According to the Journal, "These moves are among the latest in a market battle that has helped lead to lower prices and greater use of generic drugs."

This summer, Walgreen strengthened marketing for its Prescription Savings Club, which provides customers with discounts on generic drugs and 5,000 brand-name medications, as well as rebates on store-brand products. CVS this fall introduced a discount program for uninsured customers that offers a 90-day supply of more than 400 generic drugs for $9.99 and a 10% discount at the company's store-based health clinics.

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In September, Rite Aid unveiled a prescription savings card that offers hundreds of generic drugs at $8.99 for a 30-day supply or $15.99 for a 90-day supply, in addition to discounts on brand-name drugs and store-brand products. Rite Aid CEO Mary Sammons in September acknowledged that the programs were beginning to affect consumers' decisions about where to purchase medications, the Journal reports.

Kermit Crawford, senior vice president of pharmacy at Walgreen, said, "I don't know if I would term it a generic price war," adding, "I think that the pricing is competitive within certain therapeutic categories, and I think what you see is all of the retailers promoting their competitive price." Carolyn Castel, CVS spokesperson, said, "The prevailing economic situation only increases the need to offer options" for the underinsured and uninsured.

Pharmacy benefit managers such as CVS, Medco Health Solutions and Express Scripts, which administer large U.S. mail-order pharmacies, said retail generic discount programs are not hurting their businesses. Medco Vice President for Channel and Generic Strategy Ken Malley said, "The movement's really been from retail to retail. We have not seen movement from our mail pharmacies." He added that mail-order programs mostly serve the insured, while retail programs tend to focus on uninsured patients. He also noted that generic drug prices for the insured already are low (Wisenberg Brin, Wall Street Journal, 12/22).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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