I was reading around on CNN.com this morning (sitting here in English class–not doing my work, I may add), and I found this.
NEW YORK (CNNMoney) — Wal-Mart announced Thursday that it is testing a program in Florida to sell about 300 generic prescription drugs for as low as $4 for a 30-day supply.
The world’s largest retailer said the program, to be launched on Friday, will be available to customers and employees of 65 Wal-Mart stores, Wal-Mart neighborhood market stores and Sam’s Club pharmacies in the Tampa Bay, Fla., area, and will be expanded to the entire state in January 2007.
The $4 pricing will be available to all pharmacy customers with a doctor’s prescription that can be filled with a covered generic medicine, the retailer said.
This program will be available to the uninsured, although insurance will be accepted. It will cover 291 generic medications from many of the most common therapeutic categories, the company said.
The medicines covered by the new plan include those used to treat and manage conditions including allergies, cholesterol, high blood pressure and diabetes. Some antibiotics, antidepressants, antipsychotics and prescription vitamins are also included.
“This move is possibly the most forceful supply chain move by Wal-Mart in years, since their final retail pricing for many generics will beat the market prices at other pharmacy counters,” Richard Hastings, senior retail analyst with Bernard Sands, wrote in a note Thursday.
Hastings said the big chain drug companies, Walgreen (Charts), CVS (Charts) and Rite Aid should be able to respond to Wal-Mart’s challenge, but smaller prescription drug buyers, including certain supermarket chains that offer pharmacy services could see some margin erosion if they are forced to compete on price.
“From an earnings perspective, this should be a neutral event for Wal-Mart,” he said. “It could improve customer loyalty and stopper traffic over the long term. The key for Wal-Mart is to get customers in, and keep them shopping in other departments. We’ll wait and see if this works, but it will take up to two years to know if this has helped with cross-departmental traffic and conversion.”
Wal-Mart (Charts), which has been the target of critics who complain that its health insurance is out of reach for many of its 1.3 million U.S. employees, has in the past year introduced several programs to improve its benefits for workers.
In April, the company extended insurance coverage to the children of part-time workers and started a benefit plan with monthly premiums as low as $11.
Wal-Mart said the program will help alleviate a major challenge for seniors who have fallen into the “doughnut hole” coverage gap in their Medicare Part D prescription drug plans and now find themselves responsible for paying 100 percent of their prescription medicine costs
Bill Simon, executive vice president of the Professional Services Division for Wal-Mart, said in a company statement that purchasing a 30-day supply of the diabetes drug, Metformin, for $4 represents a nearly 50 percent savings from the cost of the brand name version of the drug.
In addition, he estimated that purchasing a 30-day supply of a brand name blood-pressure drug typically costs $12. Getting the generic, Lisinopril, for $4 saves customers nearly $100 annually.
On the surface, I think it’s great that Wal-Mart is taking this kind of step to provide access to medicines that some of the lower income families might not be able to afford otherwise. This is one time that Wal-Mart has made a great decision (now if we could get them to pay higher wages, we’d be in business).
