Wal-Mart's Expands $4 Drug List, Puts Pressure on Drug Store Chains

Wal-Mart (WMT) knows how to knock the stuffings out of its competitors' stock prices and make its customers happier. When it announced its $4 prescription drug program a couple of years ago, the stock prices for Walgreens (WAG), CVS Caremark (CVS) and other drug store chains and pharmacy benefit managers such as Medco (MHS) took a tumble. All of Wal-Mart's pharmacy competitors met its $4 deal, and they won't be able to avoid to continue meeting its prices on the expanded list of low priced generics drugs that Wal-Mart announced yesterday.

Somehow almost all of the drug store chains and PBMS have managed to grow their profits despite the generics drugs price war. This price war also will continue to help the makers of generic drugs while putting new price pressures on the big pharma makers of patented prescription drugs.

Wal-Mart said it is expanding its $4 prescription drug program and is specifically targeting the mail order pharmacy benefit managers that health insurers use to reduce their drug costs. The new phase three of Wal-Mart's program

. . .now covers a 90-day prescription for $10, additional women’s health medications and a new $4 over-the-counter [OTC] offer. The 90-day option gives more choices to customers and physicians who may have been limited to mail order prescriptions in the past.

Of course, as it always is with Wal-Mart, the big winners are the consumers. Some of WMT's close drug store and PBM competitors include Wallgreens (WAG), CVS Caremark (CVS), Express Scripts (ESRX), Long Drugs (LDG), Medco (MHS), Drugstore.com (DSCM) and Rite Aid (RAD). Daily charts are here. Click on a chart to see weekly and point and figure (PnF) charts.

Full disclosure. I have no positions in WMT or the other stocks mentioned.

Comments

[October1929:]

Unfortunately there are no antidepressants or antipsychotic drugs that are the beneficiaries of this new 90-day $10.00 prescription program.

Sadly, discrimination against mental health consumers continues.

2008 May 06 04:22 AM

[Frank Lind:]

Disagree.
The moat of pharmacies are their convenience. In actual fact WMT has taken very little market share from WAG and CVS.

2008 May 06 06:32 AM

[User 149415:]

But, are these generics comming from China complete with their unknown and sometimes deadly ingredients ??

2008 May 06 12:11 PM

[Stephen Ros...:]

October 1920, help is on the way. WMT already offers several antidepressants for $4 for 30 days. That's $12 for 90 and I think they also may qualify for $10. Celexa, fluoxetine to name a few.

2008 May 06 12:51 PM

[quick:]

I disagree as well. The first time WMT announced this $4 drug plan, CVS and WAG both got hammered for about a month. But that proved to be excellent buying opportunities for both stocks, especially CVS. The WMT plan has not made a dent in CVS's earnings at all, and I don't expect it to start now.

If you think about it, why would you drive out of your way to a Wal Mart when a CVS or WAG is probably less than a mile away from your house. Just the money you'd waste in gas will use up the money you save on your Rx. Even more so if you have it mail ordered!

I think the WMT plan is good for people who before couldn't afford their prescriptions and were doing without. Most people have health insurance though and don't need to be bothered with WMT's offer.

2008 May 06 03:48 PM

[Roudy:]

Cut it any way you want Wal-Mart has been a blessing for us low income people. I will stand by Wal-Mart as long as they continue to offer the lowest prices overall in every area of the store. I dare any of the EX-Pert to challenge this poor country boy on a fair playing field.
RoudMan

2008 May 06 10:51 PM

[Strangeb:]

The new expanded program will get to the Mail Order companies. I have two RX that were Mailorders that Wal-Mart now sells. MailOrder (Caremark-ie:CVS) $20 for 90. Wal-Mart just cut that inHalf. Thanks Wally World

2008 May 07 11:50 AM

[Captain Dan:]

All Walmart needs is a drive up window and a soda shop with coffee and shakes and cakes! and BAM there goes the drug chains suffering again.

2008 Jun 05 07:52 PM

[Captain Dan:]

All Retailers could learn alot from Walmart.
Aldi does it right too!!

2008 Jun 05 07:55 PM

[Captain Dan:]

Dream drugstore would be a Dollar General with a Pharmacy and coffee shop. Oh the sales would be great!!~!

2008 Jun 05 08:00 PM

[Captain Dan:]

Dont forget Web connections too or wifi

2008 Jun 05 08:01 PM

[Batard:]

The service in the pharmacies at Wal-Mart is horrible. I went to fill a prescription there and the pharmacist said it would be an hour and fifteen minutes. Two hours later it still wasn't filled. I had to stand in a line five people deep to get them to give me my prescriptions. Took them to the Rite-Aid down the street and I was out the door in five minutes.
Doing business with Wal-Mart is like living the stories my teacher in the 1960's used to tell us about the Soviet Union. Long lines for everything!

2008 Jun 14 12:48 PM

[Carousel:]

Today CVS Told me they no longer will be matching Walmart's $4 price.. Do they think they no longer have to compete in the local market? Walmart is maybe 5 miles further down the road.. CVS's price.. for generic synthyroid.. 30 days, 9.85.. vs $4 for walmart or anywhere that matches their price.. lets see.. even if my car got 10 miles to the gallon the $5.85 difference still buys more than a gallon of gas so I'd save money transferring my family's prescriptions elsewhere.. Get a clue CVS.. compete, or go the way of the dinosaur..

2008 Jun 25 09:13 PM

[JoAnn:]

The wait is well worth the $ you can save. Have you tried phonning in your refills a day or two ahead of time? That way when you get to the service window, they'll be packaged and ready to go.

2008 Oct 23 09:12 AM