Wal-Mart's $4 Prescription Drug Program Expands to Colorado with Caveats

Strategic Insights -

Wal-Mart launched its cheap prescription drug program in Florida two months ago and has since added 26 states, including Colorado. The program offers hundreds of generic drugs for $4, but due to Colorado's predatory pricing laws, 55 of the low-priced generic drugs and formulations will cost $9 to fill. This move is seen as a nod to the state's laws, which prohibit the sale of goods below cost. The National Community Pharmacists Association plans to ask local attorneys general to investigate, questioning the profitability of Wal-Mart's program.

Key Takeaways:

  • Wal-Mart's $4 prescription drug program is expanding to Colorado, with 258 generic drugs available for $4 and 55 formulations costing $9 to fill due to Colorado's predatory pricing laws.
  • The program is seen as a way for Wal-Mart to differentiate itself from competitors, who have expressed concerns about the pricing strategy.
  • The National Community Pharmacists Association plans to ask local attorneys general to investigate, citing concerns about the profitability of the program.
  • Dr. Rob Valuck, a CU associate professor, disputes the costs, saying Wal-Mart can spread its costs over a giant big-box store, effectively reducing them.
  • Independent pharmacists argue that Wal-Mart's program provides minimal benefit to consumers because of the limited number of drugs sold for $4.
  • Wal-Mart has responded that the discounts pertain to a quarter of the drugs it sells.

Statistics:

  • 313 low-priced generic drugs and formulations will be available in Colorado.
  • 55 of the low-priced generic drugs and formulations will cost $9 to fill.
  • 2.1 million more new prescriptions were written in the six weeks between Sept. 21 and Nov. 12 as a result of Wal-Mart's $4 program.
  • 95% of a chain pharmacy's revenue comes from third-party payors health insurance companies paying for their members' drugs.
  • About 95 percent of Wal-Mart's customers pay cash, compared to chains like Walgreens and CVS.

Sources:

  • Rocky Mountain News
  • [Bill Wertz, Wal-Mart spokesman]
  • [John Rector, general counsel to the National Community Pharmacists Association]
  • [Dr. Rob Valuck, CU associate professor]
  • [Andrew Wolf, research analyst with BB & T Capital Markets]
  • BB & T Capital Markets
  • King Soopers
  • Cincinnati-based Kroger Co.
  • Walgreens
  • Rite Aid
  • CVS