Wal-Mart's Generic-Drug Plan Draws Mixed Reactions

While some may benefit, especially the uninsured, other consumers may be disappointed, experts say

FRIDAY, Sept. 22, 2006 (HealthDay News) -- Wal-Mart's announcement that it will begin selling almost 300 generic prescription drugs for as little as $4 for a 30-day supply will undoubtedly benefit many Americans, health industry experts say.

But other experts contend that the program, scheduled to start Friday in Tampa, Fla., and then roll out across the country sometime next year, probably won't prove to be a revolutionary step in the push to contain soaring health-care costs for consumers in the United States.

In fact, some critics are labeling the program little more than a public relations stunt by the nation's largest retailer. Others point out that the new plan omits some key drugs.

Wal-Mart's move "underscores the need for cost-effective medications to help Americans struggling with spiraling prescription drug prices," Gail Shearer, health policy director for Consumers Union, publisher of Consumer Reports, said Thursday in a prepared statement.

"There is a critical need in this country for low-cost, effective prescription drugs because millions of people are going without needed medications simply because they can't afford them," she added. "Generic drugs are a vital piece in the puzzle to bring down health care costs. They are just as effective and safe than most high-priced, heavily advertised drugs."

"This decision by Wal-Mart hopefully will encourage more competition in the drug marketplace that will lead to lower drug prices overall," Shearer said.

Wal-Mart's announcement Thursday -- that it would lower the costs of generics that usually run between $10 and $30 for a one-month supply -- seemed to have exactly that effect in the marketplace.

On Friday, Target, the nation's No. 2 discount retailer, said it would match Wal-Mart's lower prices for generic prescription drugs in the Tampa area immediately.

It was not clear, however, if Target would expand the program beyond Tampa, although the company said it has a "long-standing practice to be price competitive with Wal-Mart."

Still, some find the Wal-Mart move wanting.

The program actually includes only about 124 separate medicines in various dosages, and omits widely popular drugs, The New York Times reported Friday.

And while people without health insurance will certainly save some money, those with health insurance may save only a dollar, which could make a trip to a Wal-Mart store not worth the time.

"It is not as significant as it first seems, in our opinion," Joseph Agnese, an analyst at Standard & Poors, told the Times.

Most of the drugs on Wal-Mart's list are older generics that are relatively inexpensive already, Stephen Schondelmeyer, professor of pharmaceutical economics at the University of Minnesota, told the Chicago Tribune.

And the covered drugs also don't include the generic equivalents of such widely used drugs as the cholesterol-lowering treatment Zocor and the antidepressant Zoloft. Both drugs' patents expire this year, the newspaper said.

"This isn't addressing what is the source of people's frustrations with drug prices," Schondelmeyer told the Tribune. "This is a very limited set of drugs. It's a lot of hype and will create a lot of traffic going into Wal-Mart stores. But I think people are going to be disappointed when they go into the stores and find out their drug isn't there."

Ron Pollack, executive director of Families USA, a health-care watchdog group, called Wal-Mart's announcement part of the company's public-relations campaign to bolster its image. The company has been a target of criticism for the health benefits it offers employees, with some contending the benefits cost too much.

"I think what Wal-Mart is doing is a limited good thing," Pollack said. "Clearly, this limited, positive initiative is as much a part of Wal-Mart's public-relations efforts to blunt the deserved criticism of its poor health coverage for its workers as it is a substantive improvement."

Responding to criticisms of the program, Wal-Mart spokesman Kevin Thornton said Friday that the company would continue to add drugs to the list of cheaper medications, based on customer feedback and deals the company can make with drug manufacturers.

"Overnight we have added a medication, making the total 292 medications," Thornton said. The added drug is lovastatin, which is used to lower cholesterol.

As to whether the Wal-Mart plan was a public-relations move, Thornton said, "That is so absolutely incorrect. This is a win-win situation for customers. It stands to give significant savings for customers. This is about real solutions for health care for working families in America. This is an example of Wal-Mart doing what it does best, which is taking the cost out of the system and passing savings on to our customers."

Patricia Wilson of Associates & Wilson, a Rosemont, Pa., health-care consulting firm, said Wal-Mart apparently plans to finance the drug program by taking some of the profits from traditional middlemen to lower the prices it is charging for the generic drugs.

"There is a huge profit margin in the generics" for the middlemen like pharmacy-benefit managers, the distributors and the pharmacies themselves, Wilson told the Times.

More information

For more details on the Wal-Mart program, including a list of drugs covered, click here.

SOURCES: Kevin Thornton, spokesman, Wal-Mart Stores Inc; Bentonville, Ark.; Ron Pollack, executive director, Families USA, Washington, D.C.; Wal-Mart Stores Inc. press release; Target Corp. press release, The New York Times; Associated Press; Chicago Tribune
Consumer News