Wal-Mart cuts prices on generic drugs

Patients will save money on some commonly prescribed medicines, but observers say the retailing behemoth's initiative won't impact drug costs overall.

By Tyler Chin, AMNews staff. Oct. 16, 2006.

Wal-Mart Stores Inc.'s decision to lower the price of about 300 generic drugs to $4 per prescription is garnering great attention, but some industry observers say the move will have minimal impact on overall costs, in part because many of the drugs under the price cut were relatively inexpensive to begin with.

Also, some experts say the move is more about trying to attract customers than it is about trying to save people money on drugs, especially because Wal-Mart is still making a profit at the $4 price.

On Sept. 21, Wal-Mart began selling 30-day supplies of 291 commonly prescribed generic prescriptions for $4 each at 65 Wal-Mart, Sam's Club and Neighborhood Market pharmacies in the Tampa, Fla., area. Wal-Mart says it will expand the program statewide in Florida in January 2007 and nationwide next year. The program will accept insurance and be available to the uninsured.

"The cheaper the better for the patient," said David Lubin, MD, a family physician in Tampa and treasurer of the Hillsborough County Medical Assn., which includes Tampa. "If patients are going to buy a generic ... there's nothing wrong with paying $4 for it."

Wal-Mart's initiative will benefit anyone who has a co-pay, the uninsured, health plans and employers because they will pay less for the drugs on the company's list, said Phillip Seligman, equity research analyst at Standard & Poor's. But even if competing retail pharmacies follow Wal-Mart's lead -- one, Target Corp., says it will -- the impact on overall drug prices or the bottom lines of publicly traded managed care companies will amount to "less than a drop in the bucket," Seligman said.