Wal-Mart's Prescription Drug Plan Could Impact Entire U.S. Health Care System

Retailing giant Wal-Mart announced a new program that will offer consumers $4 prescriptions for generic drugs (you can see the full list here as a .pdf: WMT-druglist).

Several commentators have already pooh poohed this as a mere publicity stunt in an election year.

Walgreen (WAG) and CVS (CVS) and and other pharmacies have gotten shellacked on the news -- as well they should. Target (TGT) was relatively unchanged, while Rite Aid (RAD) has been a disaster for too long to remember. Wal-Mart crushed many of the inefficient or simply "less efficient" supermarkets when they moved into food retailing -- I would expect they could have a similar impact here.

In addition to selling this as a retail loss leader, I wouldn't be surprised if Wal-Mart rolled out a targeted program for certain corporate health care providers -- think either GM or Ford. It would be nice if somehow GM or Ford could lop off a few $100 from the cost of manufacturing each vehicle.

And given Wal-Mart's heft, this could very easily have a significant impact on the entire health care system in the United States.

The program will be launched tomorrow starting in 65 stores (Wal-Mart, Neighborhood Market and Sam's Club pharmacies) in Tampa Bay, Florida; It will expand statewide area, and will be expanded to the entire state in January 2007, and expanded nationwide later in the year.

Key components (via WMT's press release) include:

• $4 pricing will be available to all pharmacy customers with a doctor's prescription that can be filled via generic.

• This program will be available to the uninsured; Insurance will be accepted.

• The program presently covers 291 generic medications from many of the most common therapeutic categories.

• The medicines represented are used to treat and manage conditions including allergies, cholesterol, high blood pressure and diabetes; Some antibiotics, antidepressants, antipsychotics and prescription vitamins are also included.

Fascinating stuff . . .

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[CrossProfit_:]

See MarketWatch quotes from TEVA CEO Israel Makov analyst interview;
www.marketwatch.com/Ne...;siteid=mktw&g...

"Our innovative business is clearly going to be a significant growth driver for us."

We note that there was no reference to Teva’s generic program. This is odd if one takes into account that Teva is primarily a generic company today. The only explanation is that Teva sees the profit margins from generics dropping fast.

See Seeking Alpha article usmarket.seekingalpha....

Disclosure: This comment was written by a CrossProfit analyst and may not reflect the opinion of CrossProfit.com. Unless explicitly stated otherwise there are no conflicts of interest.
www.crossprofit.com

2006 Sep 27 08:55 AM

[Rita:]

Three cheers for all the drugstores with $4 generics! And now Wal-Mart has started selling 3 months of some generics for $10. Wow! For my other meds that aren't generic I use the prescription discount card that I found at rxdrugcard.com. Low membership fee. Drug prices posted to check before you join.

2008 Jun 24 05:31 PM

[shaemmadov:]

Take into account the cost of actually getting access to a prescribed medication. My doctor charges $150 for a regular check-up, which is required if I can obtain a prescription. He won't provide a refill for the prescription without another office visit ($75). I'm self-employed and have the least expensive "catastrophic" health insurance ($224 a month) that fits my needs.So what am I really paying for these low-cost prescribed medications?

My apologies, but low prices for prescription medications don't seem relevant to any discussion about lowering the cost of health care in the US.

2008 Dec 16 11:10 PM