Wal-Mart cuts drug price

Enthusiastic customer response speeds rollout of program

$4 generics arrive in Maryland

October 27, 2006|By M. William Salganik | M. William Salganik,Sun reporter

Wal-Mart's $4 generic-prescription program - launched yesterday in Maryland and 11 other states as part of an accelerated rollout - will likely provide price relief for the uninsured, a quick surge in sales and matching deals from other large retailers.

Target quickly said yesterday that it will match the price of $4 for a month's supply of pills in all states where Wal-Mart offers it. Kmart has a program - started months before Wal-Mart's - providing some generics at $15 for a three-month supply. Wegmans Food Markets launched a program yesterday to provide many generics at $11.99 for a three-month supply - beating the Wal-Mart price by a penny.

Wal-Mart reported 90,000 new prescriptions in the first 10 days in Florida, where it began the low-cost generic program last month, and 150,000 new prescriptions in four days in 14 states where it launched the program last week.

Initially, Wal-Mart said it outlined plans for a much slower expansion that would reach into next year, but it speeded up plans after an initial strong response. Generics are lower-cost versions of brand-name drugs whose patents have expired.

Despite the high demand, some customers are finding that the prescriptions they need are not included. The Wal-Mart list includes more than 140 medications in varying strengths, which Wal-Mart says account for about 25 percent of prescriptions it fills.

But the list doesn't include many generics, especially newer and more expensive ones, such as simvastatin, the generic version of the cholesterol-lowering Zocor. Simvastatin sells for $40 a month or more. And many brand-name drugs - the primary drivers of rising prescription costs - have no generic equivalents.

Some retailers, too, say they are feeling little effect. CVS and Walgreens, large chains that didn't match the Wal-Mart price, reported that each store fills, on average, about 250 prescriptions a day but has seen less than one prescription a day shift, said Mark Husson, an analyst with HSBC Securities in New York who follows the pharmacy chains and Wal-Mart.

In Florida, Smita Amin said the impact on her five independent drugstores in the Orlando area has been "none whatsoever - and I'm really surprised." She said many of the drugs on the Wal-Mart list are "not what physicians are commonly prescribing now."

For some consumers, the new Wal-Mart program means significant savings. Roger Bechtel, of Sparks, was one of the first at the pharmacy counter at the Wal-Mart in Hunt Valley. It was one of two Maryland sites where the store had news conferences yesterday to announce the launch.

A pleased Bechtel, who said he doesn't have insurance, had phoned in a prescription yesterday for fluoxitine, the generic version of the anti-depressant Prozac. He expected to pay $68 for a three-month supply. Arriving at the store, he found he only had to pay $12.

Florida consumers, as a group, are saving $210,000 a month on fluoxitine and $150,000 on lisinopril, a blood pressure medication, according to Nate Hurst, Wal-Mart's director of public affairs, who was at the Hunt Valley kickoff.

The $4 plan is effective in all 53 Wal-Mart and Sam's Club stores in Maryland that have pharmacies, according to Ken Sasse, Wal-Mart's pharmacy division manager for northeastern states.

"This allows us to do what we do best," Sasse said. "Our knowledge of supply chain management and pharmacy operations drives costs out of the system."

He said Wal-Mart would not be losing money on the $4 generics. While the company couldn't provide a pre-$4 price list for the drugs - Sasse said they varied in different markets - he said most cost $6 to $25 before yesterday.

Like Bechtel, other shoppers in the Hunt Valley store were happy with the potential savings, although less sure how much it would mean for them.

John Stottlemyer, of Hunt Valley, said he hadn't yet figured out whether any of his medications were on the list but said it would "quite obviously" help: "The cost of drugs is sky-high anymore." He said he has insurance but has a $20 co-payment for generic drugs.

Carole Nicholson, of May's Chapel, said her insurance has no co-payment for generic drugs but anything that produced pressure for lower-cost medications was "a splendid idea."

It's not clear, however, how much pressure the Wal-Mart pricing will have on traditional pharmacies.

"We haven't seen the major traditional drugstore chains try to match it, just the mass merchandisers," such as Target and Costco, said Michael Jackson, executive vice president and CEO of the Florida Pharmacy Association.

Philip L. Marsiglia, owner of South Baltimore Pharmacy in Cherry Hill, said it costs him more than $4 per prescription to open the store, talk to the customers and fill the orders. He said big-box retailers and grocery chains can use low-cost prescriptions to get people into the store - where they will also buy groceries or clothing.

"We're not selling anything else," Marsiglia said. "We're selling medications."

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