Wal-Mart Sees Generic-Drug Plan In Most Of US This Year
$4 Dollar Generic Drug Expansion
Wal-Mart Stores Inc. (WMT) expects to offer $4 prescriptions for some generic drugs in most states this year after expanding the low-cost drug program from a test market to all of Florida ahead of schedule, the world's largest retailer said Thursday.
Wal-Mart launched the program last month in the Tampa area in what it called an effort to save working Americans money on health care. But critics said it was a stunt to draw in business and a grab for a bigger share of the drug business.
At the time, Wal-Mart said it would expand the Tampa test statewide by January and nationally next year.
But customer demand was strong and Florida officials asked for a faster rollout, Wal-Mart said. It announced the statewide rollout effective Friday at a news conference in Orlando, Fla., with executives and Florida Gov. Jeb Bush.
It is also accelerating the national plan, said Bill Simon, executive vice president of Wal-Mart's professional services division.
"I would expect that we would be in most of the U.S. this year. That's the plan," Simon told The Associated Press in a telephone interview.
Minneapolis-based Target Corp. (TGT), the country's No. 2 discounter behind Wal-Mart, said it would match its rival's lower prices in Florida as it did already in the Tampa area.
Walgreen Co. (WAG), one of the nation's biggest drug store chains, won't cut prices. Spokesman Michael Polzin said 95% of Walgreen customers have prescription insurance and the Deerfield, Ill.-based chain has seen no significant effect on its Tampa pharmacies from Wal-Mart's launch there.
Wal-Mart also raised the number of generic prescription drugs offered under the $4-for-a-month's-supply plan to 314 from 291. The new number comprises 143 drugs in a variety of dosages and solid or liquid forms that together make up the total, up from about 125 drugs when the program started, Wal-Mart said.
It is the latest health-care initiative by Wal-Mart since late last year as the nation's largest private employer seeks to deflect union-backed criticism of its worker benefits.
Health-care experts said any price competition is welcome but noted that generics are less of a burden to consumers than higher-priced brand-name drugs that are still under patent.
"Generics are not very expensive in the first place. It's a good thing to make generic drugs cheaper, but that isn't where most of the big costs are," said Gary Claxton, a vice president of the Henry J. Kaiser Family Foundation, which analyses health care issues.
Critics including independent pharmacies that compete with Wal-Mart called the plan a publicity stunt to get more shoppers in the door while covering only a fraction of some 8,700 generic drugs approved by the U.S. Food and Drug Administration.
"It's a loss-leader-type program that is solely aimed at getting people in the door at Wal-Mart. Most people going to get their prescriptions filled will be disappointed," said Charlie Sewell, executive vice president of government affairs at the National Community Pharmacists Association. The NCPA says it represents about 24,000 non-chain pharmacies.
Union-backed WakeUpWalMart.com said many of the $4 drugs were old medicines already offered at low prices by local pharmacies.
Wal-Mart disputed that it was selling the drugs at a loss. It has said its size and supply-chain efficiency allows it to sell the $4 drugs and still turn a profit.
Wal-Mart said the $4 generics account for about 30%of all prescriptions filled at its Florida stores.
"If there's one thing we've learned in the past two weeks, it's that Wal-Mart can play a unique role in responding to the needs of our customers who have struggled for too long with the high costs of prescription medications," Wal-Mart's Simon said. "This introduces competition to an area where there has not been enough of it."
Wal-Mart customer Sidney Smith of Orlando said he can get a 90-day supply of generic drugs in his health-care plan.
"But for someone who doesn't have health insurance, it's a breath of fresh air," Smith said.
Wal-Mart started offering the $4 drugs last month at Tampa-area stores and Sam's Club membership warehouses.
Consumers could save an average of 20%, and up to 90% on some prescriptions under the Wal-Mart program. The drugs covered are used to treat conditions ranging from high-blood pressure to allergies.
Simon said the source of the company's prescription drugs wouldn't change. Some are domestically produced, and some are imported from abroad. He didn't name specifically where the drugs come from.
"We don't do anything different than anyone else does," Simon said.
He said that within 10 days of the Sept. 21 launch of the low-cost generic drug program in the Tampa Bay area, Wal-Mart filled 36,000 new prescriptions. He said the company hopes to expand the program beyond Florida "to as many states as possible" in the weeks ahead.