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Wal-Mart Brings $4 Generic Prescription Drug Plan To N.C.

Posted October 19, 2006

— Wal-Mart executives announced Thursday that the company is expanding its generic prescription drug program to the Tar Heel state.

An official said Wal-Mart will begin offering $4 generic prescription drugs in North Carolina and other states.

The program affects 132 Wal-Marts and Sam's Clubs in North Carolina. It was unveiled in Florida earlier in October.

More than a million uninsured North Carolina residents qualify for the new program.

“Since we began the program in September, we’ve been committed to bringing it to other states as soon as possible,” said Wal-Mart Chief Executive Officer Lee Scott. “Customers have told us again and again how valuable the $4 generic prescription program is. So we’re thrilled that we can respond in a way that cuts costs out of the system and brings more affordable medicines to our customers. This program is making a real difference in the health of our customers and our communities.”

Analysts said the main benefit for Wal-Mart is in drawing more shoppers, who may come for prescriptions and then stay to buy in other departments.

"It must be working for them. They must be seeing a benefit if they're expanding this rapidly," said Richard D. Hastings, senior retail analyst with Bernard Sands LLC.

Reaction from Wal-Mart's big-chain rivals was mixed.

Target Corp., the no. 2 discounter behind Wal-Mart, said it will match the discount in all the same states except Alaska and Vermont, where it does not have stores.

“Consistent with our long-standing practice to be price competitive with Wal-Mart on like items in local markets, we plan to match Wal-Mart’s new, lower prices on generic drugs in the Target pharmacies in Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon and Texas,” the company said in a statement.

Other chains said they would not change prices that they contend are already competitive, especially for people with insurance who only foot the cost of a co-pay.

"Wal-Mart's limited price promotion is in response to the increasing number of seniors choosing Walgreens for their pharmacy needs. Therefore, Walgreens will not match Wal-Mart's promotion," Deerfield, Ill.-based Walgreen Co., the nation's largest drugstore chain by sales, said in a statement.

“Once consumers learn the fine print of Wal-Mart's program, they'll realize Walgreens offers the best value for pharmacy patients with its convenient locations, close-in parking and unique pharmacy services,” the company added.

Kmart, which is part of Sears Holding Corp., noted that it started offering 184 generic prescriptions in May in all its 1,100 pharmacies nationwide for $15 for a 90-day supply and would stand by that program.

Wal-Mart's plan covers a month's supply of 314 prescriptions. That number is made up of 143 drugs in a variety of dosages and solid or liquid forms.

Wal-Mart held news conferences in states from Vermont to Alaska to announce the move as it speeds toward national coverage by the end of the year. Wal-Mart will continue to expand into other states "as quickly as possible," although regulatory and legal hurdles may slow the move in some states, company spokesman Dave Tovar said.

Wal-Mart first launched the program in the Tampa area two months ago, then expanded it to all of Florida two weeks ago in what it called an effort to save working Americans money on health care.

Health care experts said any price competition is welcome, but noted that generics are less of a burden to consumers than higher-priced brand-name drugs that are still under patent.

Critics, including rival non-chain pharmacies, said the plan covers only a fraction of a prescription drug market that includes about 8,700 generics approved by the FDA.

"This is a public relations stunt meant to drive foot traffic. Most people will find their prescriptions do not fall under the $4 plan," said Charlie Sewell, senior vice president of government affairs at the National Community Pharmacists Association. The NCPA says it represents about 24,000 non-chain pharmacies.

At one of the Wal-Mart news conferences in Little Rock, Ark., Tony Nation, regional pharmacy manager for Arkansas and Missouri, recounted stories of customers hugging pharmacists in Florida after $4 plan began.

"No one company, no one group can solve the problems facing our health care costs," Nation said. "But this program is a start."


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