More Wal-Mart News

[juddling]

NEW YORK - Wal-Mart plans to begin selling nearly 300 generic prescription drugs for a sharply reduced price, offering a big lure for bargain-seeking customers and presenting a challenge to competing pharmacy chains.

 

The world's biggest retailer said Thursday that it will test its sales program, in which 291 generic drugs will be sold at $4 for a month's supply, in Florida. The drugs involved provide treatments for conditions ranging from allergies to high-blood pressure.

 

Selling generic drugs at prices that don't offer much if any margin for profit could serve two purposes for Wal-Mart: It could draw customers away from big pharmacy chains to Wal-Mart stores that offer a much wider array of products, and it could help Wal-Mart with an image problem stemming from its policies on health insurance for employees.

 

"We're able to do this by using one of our greatest strengths as a company — our business model and our ability to drive costs out of the system, and the model that passes those costs savings to our customers," Bill Simon, executive vice president of the company's professional services division, said in announcing the plan at a Tampa, Fla., store. "In this case were applying that business model to health care."

 

Wal-Mart Stores Inc. officials said the reduced price represents a savings to the customer of up to 70 percent on some drugs. The average monthly cost for a generic drug prescription is $28.74, according to the National Association of Chain Drug Stores. For branded drugs, that figure is $96.01.

 

The program will be launched on Friday at 65 Wal-Mart, Neighborhood Market and Sams' Club pharmacies in the Tampa Bay area and will be expanded to the entire state in January.

 

Simon wouldn't be specific about why Florida and specifically the Tampa Bay area was chosen for the rollout of the initiative, saying only that there was a need for it here.

 

The company said it plans to expand the program to as many states as possible next year.

 

Simon said the 291 generic drugs include "the most commonly prescribed drugs for the some of the most common illnesses that face Americans today, including cardiac disease, asthma, diabetes, glaucoma, Parkinson's (disease) and thyroid conditions."

 

Simon wouldn't give details on how much the plan is expected to cost Wal-Mart or the company's dealings with the drug companies involved.

 

The $4 prescriptions are not available by mail order and are being offered online only if picked up in person in the Tampa Bay area.

 

In a conference call with reporters, Simon said that the generic drugs would not be sold at a loss to entice customers into the stores, a strategy that has been used in Wal-Mart's toy business.

 

He said Wal-Mart is working with drugmakers to help them be more efficient, but added, "We are working with them as partners. We are not pressuring them to reduce prices."

 

Tampa Wal-Mart pharmacy customer Pat Sullivan praised the company's initiative. The retired Massachusetts police officer said $4 generic prescriptions are a tremendous help.

 

"I'm on disability and my benefits run out by the end of the month," he said. "It comes down to where do I go for a $100 prescription? I have no outlet other than to break a pill in half and take half today and half tomorrow."

 

Wal-Mart's recent moves to improve its health care included relaxing eligibility requirements for its part-time employees who want health insurance, and extending coverage for the first time to the children of those employees. Part-time employees, who had to work for Wal-Mart for two years to qualify, now have to work at the company for one year. This year, Wal-Mart also expanded a trial run of in-store clinics, aimed at providing lower cost non-emergency health care to the public.

 

Wake Up Wal-Mart has called upon Bentonville, Ark.-based Wal-Mart to offer better health care coverage and higher pay to employees.

 

This past summer, Wal-Mart won a successful fight against a first-of-its-kind state law that would have required the retailer to spend more on employee health care in Maryland. A federal judge ruled in July that it was invalid under federal law. But other states are considering similar legislation aimed at the company.

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[NorthSideSox72]

This is actually pretty great stuff. Its like two negatives making a positive. Walmart is really great at "pushing cost out of the system" as they put it, and one of the main ways they do that is use their distribution size and network to hold suppliers over the barrel on price. Drug companies make absurd profits by charging differentially and pushing their drugs through medical professionals.

 

Now Walmart comes along, engages them as "partners", and one company's questionable but effective tactic cancels out that of another. And the consumer, ultimately, wins.

 

As much as I despise Walmart, I have to say...

[GaelicSoxFan]

NEW YORK - Wal-Mart plans to begin selling nearly 300 generic prescription drugs for a sharply reduced price, offering a big lure for bargain-seeking customers and presenting a challenge to competing pharmacy chains.

 

The world's biggest retailer said Thursday that it will test its sales program, in which 291 generic drugs will be sold at $4 for a month's supply, in Florida. The drugs involved provide treatments for conditions ranging from allergies to high-blood pressure.

 

Selling generic drugs at prices that don't offer much if any margin for profit could serve two purposes for Wal-Mart: It could draw customers away from big pharmacy chains to Wal-Mart stores that offer a much wider array of products, and it could help Wal-Mart with an image problem stemming from its policies on health insurance for employees.

 

"We're able to do this by using one of our greatest strengths as a company — our business model and our ability to drive costs out of the system, and the model that passes those costs savings to our customers," Bill Simon, executive vice president of the company's professional services division, said in announcing the plan at a Tampa, Fla., store. "In this case were applying that business model to health care."

 

Wal-Mart Stores Inc. officials said the reduced price represents a savings to the customer of up to 70 percent on some drugs. The average monthly cost for a generic drug prescription is $28.74, according to the National Association of Chain Drug Stores. For branded drugs, that figure is $96.01.

 

The program will be launched on Friday at 65 Wal-Mart, Neighborhood Market and Sams' Club pharmacies in the Tampa Bay area and will be expanded to the entire state in January.

 

Simon wouldn't be specific about why Florida and specifically the Tampa Bay area was chosen for the rollout of the initiative, saying only that there was a need for it here.

 

The company said it plans to expand the program to as many states as possible next year.

 

Simon said the 291 generic drugs include "the most commonly prescribed drugs for the some of the most common illnesses that face Americans today, including cardiac disease, asthma, diabetes, glaucoma, Parkinson's (disease) and thyroid conditions."

 

Simon wouldn't give details on how much the plan is expected to cost Wal-Mart or the company's dealings with the drug companies involved.

 

The $4 prescriptions are not available by mail order and are being offered online only if picked up in person in the Tampa Bay area.

 

In a conference call with reporters, Simon said that the generic drugs would not be sold at a loss to entice customers into the stores, a strategy that has been used in Wal-Mart's toy business.

 

He said Wal-Mart is working with drugmakers to help them be more efficient, but added, "We are working with them as partners. We are not pressuring them to reduce prices."

 

Tampa Wal-Mart pharmacy customer Pat Sullivan praised the company's initiative. The retired Massachusetts police officer said $4 generic prescriptions are a tremendous help.

 

"I'm on disability and my benefits run out by the end of the month," he said. "It comes down to where do I go for a $100 prescription? I have no outlet other than to break a pill in half and take half today and half tomorrow."

 

Wal-Mart's recent moves to improve its health care included relaxing eligibility requirements for its part-time employees who want health insurance, and extending coverage for the first time to the children of those employees. Part-time employees, who had to work for Wal-Mart for two years to qualify, now have to work at the company for one year. This year, Wal-Mart also expanded a trial run of in-store clinics, aimed at providing lower cost non-emergency health care to the public.

 

Wake Up Wal-Mart has called upon Bentonville, Ark.-based Wal-Mart to offer better health care coverage and higher pay to employees.

 

This past summer, Wal-Mart won a successful fight against a first-of-its-kind state law that would have required the retailer to spend more on employee health care in Maryland. A federal judge ruled in July that it was invalid under federal law. But other states are considering similar legislation aimed at the company.

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How nice. Very (bleeping) magnanimous of them.

[southsider2k5]

You know what will happen next, right? Now we will start to hear about the poor local pharmasists who are going to go out of business because of those low drug prices...

[NorthSideSox72]

You know what will happen next, right? Now we will start to hear about the poor local pharmasists who are going to go out of business because of those low drug prices...

Actually, Walgreens already took care of that.

[HuskyCaucasian]

This is actually pretty great stuff. Its like two negatives making a positive. Walmart is really great at "pushing cost out of the system" as they put it, and one of the main ways they do that is use their distribution size and network to hold suppliers over the barrel on price. Drug companies make absurd profits by charging differentially and pushing their drugs through medical professionals.

 

Now Walmart comes along, engages them as "partners", and one company's questionable but effective tactic cancels out that of another. And the consumer, ultimately, wins.

 

As much as I despise Walmart, I have to say...

 

Ya know, that is a very interesting perspective. I woudl never have thought of it that way. I too am not a fan of Wal-Marts tactics, but in this case... rock on Wal-Mart!

[NUKE_CLEVELAND]

You know what will happen next, right? Now we will start to hear about the poor local pharmasists who are going to go out of business because of those low drug prices...

 

 

Wal-Mart can do no right with some people. They are going to get bashed no matter what they do.

[Balta1701]

So, someone want to tell me why Medicare is forbidden from doing this?

[NUKE_CLEVELAND]

So, someone want to tell me why Medicare is forbidden from doing this?

 

 

Way I see it, Medicare and SS should both be blown up and redone. In their present forms they burn through more and more money every year and the value of their services declines at the same rate.

[Balta1701]

Way I see it, Medicare and SS should both be blown up and redone. In their present forms they burn through more and more money every year and the value of their services declines at the same rate.

Can't complain on Medicare...if nothing else, the drug benefit still should have been able to negotiate lower prices with drug companies.

[NorthSideSox72]

So, someone want to tell me why Medicare is forbidden from doing this?

And so Walcare was born...

[Rex Kickass]

Can't complain on Medicare...if nothing else, the drug benefit still should have been able to negotiate lower prices with drug companies.

The Medicare drug benefit program was pretty much a payout to drug companies more than a serious benefit to the people who are going to use them. When I sold radio, one of my clients was a local pharmacist. His reaction: "This is a long-term disaster for most seniors."

 

What Wal-Mart is doing here kicks much ass. And yeah, the local pharmacy is pretty much dead. Thanks to Walgreens, CVS and Rite Aid.

[Balta1701]

So, one of the lesser known methods Wal-Mart has used to maximize its profits is to take advantage of the fact that most people don't actually know how much a lot of products cost.

 

The classic example is given in this story from 2005...a simple pocket comb can be purchased by most people for about a quarter if you go to a barber (the barber in this example gets them for $.08 a piece). But at Wal-Mart, a cheaper comb goes for $.99. People don't know well how much they should actually spend on such a product, so they buy it from Wal-Mart anyway.

 

Wal-Mart gets around this by identifying roughly 1-2% of their products that people actually do know the price of. These goods are then always placed at the lowest prices, advertised, and given key spaces within the stores. So, people see the goods whose prices they know at lower prices at Walmart, and simply assume all goods are well priced there. It is for this reason that Wal-Mart's slogan had to change from "Always the lowest price" to "Always Low Prices" several years ago.

 

I spell this out of course in the Wal-mart prescription drugs post...because...guess what...they're doing exactly the same thing with prescription drugs. Creating a level price for about 100 drugs, some of which should be less expensive than the $4 talked about here, repeating the same drug on their list several times, and so on.

Weeks after Wal-Mart announced it will sell a month’s supply of some generic drugs for $4, the retailer is being accused of using already cheap drugs to lure customers.

 

Wal-Mart started selling 291 generic prescriptions last month for $4 each in the Tampa Bay, Fla., area. The program went statewide Friday in Florida, and Wal-Mart said it will take the program nationwide this year.

 

Company spokesman Kevin Gardner said the drugs chosen are one-fifth of the prescriptions the retailer fills each year.

 

"The whole country is struggling with high health-care costs, and we saw this as a solution," he said.

 

But some industry experts say this is little more than a marketing move.

 

Wal-Mart’s list of $4 drugs includes medications used to treat infection, depression, coughs and diabetes.

 

A closer look at the list shows some drugs are listed over and over again. For example, the antibiotic amoxicillin is listed 12 times, but in different dosages.

 

"I’m not saying it’s a bait and switch, but you’re left with 124 different drugs, which is fine, but not compared to the thousands of generic drugs out there," said Ernest Boyd, executive director of the Ohio Pharmacists Association.

 

The National Community Pharmacists Association put out a news release echoing the point.

 

Gardner disagrees and said the 291 medications "are entirely different prescriptions."

 

Regardless, he said, there’s anecdotal evidence that the program is saving money for people in the Tampa Bay area.

 

"Customers are walking in and saving $200," he said. "That’s a lot of money for someone on a fixed income."

 

How much money can consumers really save?

 

There are more than 3,000 generic drugs available in the United States.

 

Many of the generic drugs Wal-Mart chose are older drugs that already are inexpensive, sometimes costing pharmacies less than $4, said Ben Zelman, of Medical Mutual of Ohio.

 

He pointed to hydrochlorothiazide, which is used to treat high blood pressure.

 

"It is literally pennies a pill. Sometimes you can find it for less," Zelman said.

 

People who don’t have insurance, an estimated 1.4 million in Ohio, could save money on these select drugs. But most insurance plans include co-pays of about $5 for generic drugs, Zelman said.

 

Critics say some of the moreexpensive and most-prescribed generics did not make the list.

 

These include the equivalents of Zocor, Zoloft, Zithromax and Paxil, said Wendy Morphew, spokeswoman for Aetna.

 

"The drugs on this list don’t correlate with the high-volume, high-cost generics our members are using," she said.

[NorthSideSox72]

So, one of the lesser known methods Wal-Mart has used to maximize its profits is to take advantage of the fact that most people don't actually know how much a lot of products cost.

 

The classic example is given in this story from 2005...a simple pocket comb can be purchased by most people for about a quarter if you go to a barber (the barber in this example gets them for $.08 a piece). But at Wal-Mart, a cheaper comb goes for $.99. People don't know well how much they should actually spend on such a product, so they buy it from Wal-Mart anyway.

 

Wal-Mart gets around this by identifying roughly 1-2% of their products that people actually do know the price of. These goods are then always placed at the lowest prices, advertised, and given key spaces within the stores. So, people see the goods whose prices they know at lower prices at Walmart, and simply assume all goods are well priced there. It is for this reason that Wal-Mart's slogan had to change from "Always the lowest price" to "Always Low Prices" several years ago.

 

I spell this out of course in the Wal-mart prescription drugs post...because...guess what...they're doing exactly the same thing with prescription drugs. Creating a level price for about 100 drugs, some of which should be less expensive than the $4 talked about here, repeating the same drug on their list several times, and so on.

I guess I don't see why that is a bad thing. Still looks to me like the overall model here helps Walmart AND helps the consumer (or is at least consumer-neutral in the net).

[mr_genius]

And so Walcare was born...

 

[Texsox]

Walmart is the greatest example of a free economy at work and many Americans don't like what they see. They destroy competition. Companies, big and small, go out of business. And they did it by delivering a product better and cheaper than anyone else. This would not have been allowed in a more regulated and managed competitive economy. In the US, it is allowed. They won.

 

And when I'm travelling and need to buy something, I never poke around thinking, what little mom and pop place can I find to buy this widget? Nope, I look for Walmart.

[southsider2k5]

So, one of the lesser known methods Wal-Mart has used to maximize its profits is to take advantage of the fact that most people don't actually know how much a lot of products cost.

 

The classic example is given in this story from 2005...a simple pocket comb can be purchased by most people for about a quarter if you go to a barber (the barber in this example gets them for $.08 a piece). But at Wal-Mart, a cheaper comb goes for $.99. People don't know well how much they should actually spend on such a product, so they buy it from Wal-Mart anyway.

 

Wal-Mart gets around this by identifying roughly 1-2% of their products that people actually do know the price of. These goods are then always placed at the lowest prices, advertised, and given key spaces within the stores. So, people see the goods whose prices they know at lower prices at Walmart, and simply assume all goods are well priced there. It is for this reason that Wal-Mart's slogan had to change from "Always the lowest price" to "Always Low Prices" several years ago.

 

I spell this out of course in the Wal-mart prescription drugs post...because...guess what...they're doing exactly the same thing with prescription drugs. Creating a level price for about 100 drugs, some of which should be less expensive than the $4 talked about here, repeating the same drug on their list several times, and so on.

 

The funny thing is that there is an industry term that predates even Wal-Mart... Its called "loss leaders". Every smart chain has been doing this forever.