Wal-Mart,
Target to offer generic drugs at a discount
25 September, 2006
A decision by retail giants Wal-Mart and Target
to lower the price of hundreds of generic drugs signals a potential
turning point in how much consumers pay for medication, some experts
said Friday.
Wal-Mart announced earlier this week it would
sell nearly 300 generic prescription drugs for as little as $4 for
a month's supply. Target Corp. responded immediately saying it would
match the lower prices.
For now, Wal-Mart is offering the discount in its
65 stores in Florida. But with plans to spread the program nationwide
by the end of 2007, some health experts predict more competitors
will be forced to follow suit.
Just as Wal-Mart and Target have pushed prices
lower for groceries and electronics, experts predict the price of
branded drugs with generic equivalents may also drop over the long
run. Some competitors and critics charged the move would not lower
prices since the generics being offered under the plan already are
inexpensive. And some said Wal-Mart was trying to bolster its embattled
image as a company that does not provide adequate health care for
its workers.
But many looked to the program to put new pressure
on drug prices as the retail market competes for pharmacy customers
in the future.
"Wal-Mart is such a dominant player in so
many markets, you're not going to be able to charge $10 in one place
and $4 in another place and stay in business," said Gerard
Anderson, a professor at the Bloomberg School of Public Health at
Johns Hopkins University. "This should drive prices down."
The price change could be of particular benefit
to the nation's 46.6 million uninsured People. Wal-Mart said
it adopted the initiative to help the disadvantaged, including poor
families, retirees and senior citizens on Medicare. Target said
its decision was "consistent with its long-standing practice
to be price competitive with Wal-Mart."
Wal-Mart's price strategy comes as concerns over
inflated health-care costs continue to stir a national debate. Prescription
drugs are one of the fastest-growing health-care expenses. People
spent $188.5 billion on prescription drugs in 2004, more than quadruple
the $40.3 billion spent in 1990, according to The Henry J. Kaiser
Family Foundation, a health research group in Menlo Park, Calif.
Generic drugs make up about 56 percent of all prescription
drug sales. But generics are much cheaper, making up about 13 percent
of prescription drug costs. In 2004, the average price of a generic
prescription drug was $28.71. The average price of a brand name
prescription drug was $95.54. Generic drugs - often released when
a branded drug's patent expires - primarily are made up of the same
active ingredients.
Wal-Mart and Target competitors, for the most part,
aren't folding under the pressure to provide lower cost medications
just yet, saying the savings aren't as good as they seem. CVS, Rite
Aid Corp. and Walgreens said they will keep their prices the same.
The drug store companies say the $4 plans target
just a sliver of the generic drug market. There are nearly 9,000
generic drugs approved.
