Wal-Mart to Cut Prices for Generic Drugs

Friday, September 22, 2006

Wal-Mart, the world's largest retailer, plans to slash the prices of almost 300 generic prescription drugs, offering a big lure for bargain-seeking customers and presenting a challenge to competing pharmacy chains and makers of generic drugs.

The drugs will be sold for as little as $4 for a month's supply and include some of the most commonly prescribed medicines such as Metformin, a popular generic drug used to treat diabetes, and the high blood pressure medicine Lisinopril.

Wal-Mart Stores Inc. will launch the program Friday at 65 Wal-Mart, Neighborhood Market and Sams' Club pharmacies in Florida's Tampa Bay area. It will be expanded statewide in January and rolled out to the rest of the nation next year, company officials said Thursday.

The news sent the shares of big pharmacy chains like Walgreen's and CVS slumping because of fears that Wal-Mart's price cuts could cost them market share. Analysts said consumers will save an average of 20 percent and up to 90 percent in some cases. Shares of prescription drug management companies and some generic drugmakers fell as well.

Analysts said the risks to Wal-Mart are slim because profit margins on most of the drugs already are low _ and the program could help the Arkansas-based retailer address an image problem stemming from its policies on health insurance coverage for employees.

"They are doing something that may be good for consumers, but they don't have altruistic motives," said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle. "They are capitalists. They still need to make a profit."

Tampa Wal-Mart pharmacy customer Pat Sullivan, a retired Massachusetts police officer, said $4 generic prescriptions would be a tremendous help.

"I'm on disability and my benefits run out by the end of the month," he said. "It comes down to where do I go for a $100 prescription? I have no outlet other than to break a pill in half and take half today and half tomorrow."

The $4 prescriptions are not available by mail order and are being offered online only if picked up in person in the Tampa Bay area.

Bill Simon, executive vice president of the company's professional services division, told reporters that the generic drugs would not be sold at a loss to entice customers into the stores, a strategy that has been used in Wal-Mart's toy business.

"We're able to do this by using one of our greatest strengths as a company _ our business model and our ability to drive costs out of the system, and the model that passes those costs savings to our customers," he said at a Tampa Wal-Mart. "In this case, we're applying that business model to health care."

Simon said Wal-Mart is working with the 30 participating drug companies to help them be more efficient. "We are working with them as partners. We are not pressuring them to reduce prices," he said.

David W. Maris, an analyst at Banc of America, said in a report issued Thursday that the plan could "squeeze the generic manufacturers." But Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Association, disputed that, saying Wal-Mart's plan will have "little impact" on its members.

The initiative follows a series of moves by Wal-Mart to improve its health benefits since last October. They include relaxing eligibility requirements for its part-time employees who want health insurance, and extending coverage for the first time to the children of those employees. Last October, Wal-Mart offered a new lower-premium insurance aimed at getting more of its work force on company plans.

Wal-Mart's shares fell 41 cents to close at $48.46 in trading Thursday on the New York Stock Exchange. But shares of the nation's largest drug chain, Walgreen Co., slumped 7.4 percent and the stock of rivals CVS Corp. and Rite-Aid Corp. dropped more than 8 percent and more than 5 percent, respectively. Shares of generic drug makers Barr Pharmaceuticals Inc.'s and Mylan Labs also fell, as did the stock of Caremark RX Inc., a pharmacy benefit manager firm.

Still, Rite-Aid and Walgreens executives both noted that Wal-Mart's list of the discounted generics contains only a small percent of the 1,500 and 1,800 generic drugs each offers, respectively.

Faced with soaring drug costs, consumers are increasingly turning to generic drugs, which often are made by multiple companies after the original patent on the medicines expire. The average monthly cost for a generic drug prescription is $28.74, according to the National Association of Chain Drug Stores. For branded drugs, that figure is $96.01.

The Generic Pharmaceutical Association, a trade association, said generic medicines account for 56 percent of all prescriptions dispensed in the United States, but only 13 percent of all dollars spent on prescription drugs.

___

Associated Press Writer Mitch Stacy in Tampa, Fla. and Shaila Dani in New York contributed to this report.

___

On the Web:

For a list of generic drugs to be sold at discounted prices and details about the program: http://www.walmartfacts.com



Copyright © 2006 Salem Web Network. All Rights Reserved.

If this brings down the price of drugs overall, then hooray. For some "unknown" reason, the citizens of the U.S. pay more for drugs than other countries, even though they are manufactured here! This is a positive step in Capitalism. For the Money spent fighting wars around the globe by the U.S., we could have free health care for every citizen. What a terrible Idea, stop fighting wars and take care of our citizens, bolderdash. Wal-mart Is a mixed bag with me, I like the low prices, but don't like the exploitation of workers in poor countries,and workers in the U.S. either. I have no clue as to how to keep prices low and pay reasonable wages. I don't think it possible, unless, the profit margin is too high in proportion to wages. Now V-Redd thats my opinion, please refrain from scolding me like a 10 year schoolboy!

Hey, no scolding here, nor was that my intention in other threads as well.

"For the Money spent fighting wars around the globe by the U.S., we could have free health care for every citizen."

There ain't no free lunch, Med .... The government has no money of its own, other than what it extracts from the production and the labors of citizens like you and me.

Vi

how much do US citizens get taken off their check for taxes, in Canada for example if you make over 80k i think its 30% or something like that

__________________
My Signature

It is the poor that get shit on with the taxes here in Kanada.... when I am making 130+K a year, I can find MANY ways to get around the taxes, but when I was a poor pothead hippy (guess pothead and hippy go hand in hand....lol), well I had no ways of getting around it other then live like a hippy in the rain forest of Haida Gwaii for years.

__________________

Vred, you just don't get it. You must concede, that to have a civilised society, we must have some form of governence, to run this public entity, you must have taxation. I'll admit that our govt. is out of control. The free part means it is free to citizens for health care. Your right nothing is free, it's just deciding on how to spend the tax money that is supposed to better our society. I feel (emotion again) that spending our taxes on health care is a far better thing than spending it on war so the rich can get richer and the young men Die! There has been taxation as far back as you want to look. I'm no scholar on taxation, but I believe the Romans had a form of tax. You must have a monetary source for public programs. If left up to the Rich, the only bridges that would be built would be the ones to their private islands. fornicate, fornicate, fornicate!

See, you are assuming again. I am NOT against taxation at all. I am against the METHOD of taxation. I'm against a heavy, progressive income tax for the very same reason that I'm against the War on Drugs. You see, in a truely free society, it is none of the government's business what a citizen smokes, snorts, drinks or injects, as long as he/she doesn't violate the rights of another citizen in the process. By the same token, it is none of the government's business how much money a citizen makes, how he/she makes it, or how it is spent, as long as the rights of another citizen aren't violated in the process.

Liberty is liberty. We have a "slave" tax system in this country. Every citizen is assigned a Taxpayer I.D. number. Those in your party rail against a citizen I.D. card, just like those in my party do. But, it never occures to any of us that we already have one. Its called our Social Security Card. We cannot bank without it. We cannot open an account with a stock broker without it. We cannot buy or sell real estate without it. In other words, they have out financial liberty by the short-hairs. The goverrnment takes YOUR money out of your paycheck before you even see it. The money they take out represents a portion of your labor. That portion of labor they confiscate, they OWN. I've said it before ... what do you call a system, whereby your labor is owned by another? I call it slavery. The answer, in my opinion, is a simple sales tax with no write-offs except for food and medicine. And maybe a tax rebate for low income people.

Rollitup ...

To answer your question ... prior to Ronald Reagan taking office the maximum tax rate was over 70%. I believe its around 35% now. If Medical's Democratic party would have it's way, it would probably hover around 90%. For sure, they would roll back Bush's tax cuts.

Vi

Hmmm.......... Roll back the tax cuts for the rich, balance the budget, pull out of Iraq, now there's a sense of humor! Maybe we could even do away with K street, HAHAHAHAHA, I'm really laughing now! Maybe if we tried real hard we could find out about what Denny Hastert knew about Foley 3 years ago hahahahahahahahaha. See I've got a healthy sense of humor! The list of indescretions in congress is endless, both sides, just that the Republicans are in charge now, hahahahahahahaha, well I've about laughed myself out, gotta go!

Well, when you stop laughing, check out the libertarian party.

Official Website of the Libertarian National Committee

The Institute for Humane Studies - What is Libertarian?

Vi

has some merit> I took their test and came out a centrist that likes the status quo, not at all what I like, maybe I wasn't honest enough. Maybe I should have said communist, although thats not where I'm at either. I'm so confused!