HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Saturday, September 23, 2006

Walmart Generic Drugs

The New York Times reports that Walmart "will begin selling generic versions of widely prescribed drugs to its workers and customers at sharply reduced prices, a move that could force rival pharmacies to do the same."  Interesting move.  The Times states,

The giant discount chain, which has used its size to knock down the costs of toys, clothing and groceries, will sell 300 generic drugs for as low as $4 for a one-month supply. On average, generic drugs cost between $10 and $30 for a 30-day prescription.

Wal-Mart will test the lower prices at 65 stores in the Tampa, Fla., area and, depending on consumer response, is likely to expand the program next year.

The drugs covered by the program treat common conditions like allergies, cholesterol, high blood pressure and diabetes. In some cases, the company said, customers could save more than 60 percent over typical generic drug costs. The lower prices will be available to the insured and the uninsured.

The Florida experiment with lower generic drug prices appears to mark the first time that Wal-Mart has used its unrivaled influence in the American economy to lower the cost of health care for its customers. . . .

In the past year, Wal-Mart has introduced several programs to improve health benefits for its workers, like extending insurance coverage to the children of part-time workers and starting a benefit plan with monthly premiums as low as $11.

Still, critics complain that health insurance is out of reach for many of Wal-mart’s 1.3 million employees in the United States, forcing thousands of them to turn to state-sponsored programs or forgo health coverage altogether.

Several states even considered legislation that would force the chain to increase its spending on health care, but only one such bill, in Maryland, became law. The law has since been struck down by a judge, and its future is in doubt.

For Wal-Mart, the lower generic drug prices could blunt criticism of its health care coverage and prove a boon to business. Wal-Mart’s chief executive, H. Lee Scott Jr., has identified the chain’s pharmacy business as an area that needs improvement, and $4 generic drugs could turn the chain into a destination for those seeking the best prices on prescriptions.

Wal-Mart said it obtained the lower generic drug prices by squeezing costs out of its already efficient supply chain, rather than pressuring drug manufacturers to lower costs.

Ezra Klein has some further thoughts on Walmart's decision.

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