Wal-Mart, Target offer cheaper prescription drugs
Published Oct. 13, 2006
Wal-Mart, the nation's largest retail chain, began offering prescription drugs for as low as $4 at all 235 of its pharmacies in Wal-Mart, Sam's Club and Neighborhood Market in the state of Florida, the company stated in a news release on Sept. 29.
The corporation is planning to make the discount drugs available at stores in other states by the end of the year.
Originally planned for January 2007, the decision to lower drug prices for all of Wal-Mart's Florida pharmacies came 10 days after the company began testing the program in its Tampa, Fla.-area stores.
"Across the board, seniors, working families and the uninsured have lined up at our Tampa-area pharmacies and told us we are doing the right thing," Wal-Mart spokesman Bill Simon stated in the news release. "We're doing what we do best —driving costs out of the system so consumers benefit. And we're doing it in a way that introduces competition to an area where there hasn't been enough of it."
MU marketing department Chairman Ratti Ratneshwar said Wal-Mart's price reduction might help to quell criticism the company has received in recent years regarding employee benefits and treatment, as well as the company's effects on small business.
"I think Wal-Mart is probably under some minor pressure to do something to demonstrate to the public that they are a good corporate citizen," Ratneshwar said. "This is a proactive way of signaling that they can do some good."
Ratneshwar said Wal-Mart might be using its generic drugs as a "loss leader" — a term used by businesses to describe an item that doesn't necessarily generate high profits but might attract customers to retail outlets to purchase other items.
"Wal-Mart definitely thrives off of the fact that people who come to Wal-Mart usually walk out with more than they had planned to buy," Ratneshwar said.
Wal-Mart spokesman Kevin Thornton said the decision to lower drug prices stems from the company's concern for its customers' health care expenses.
"Basically this was the result of putting our heads together at Wal-Mart and coming out with a plan to deal with the current rise in health costs," he said.
Thornton said Florida was chosen as the launch site for the program because of the similarity between the demographics of the state and Wal-Mart's customer base.
Thornton said Monday that a date to start the drug program in Wal-Mart stores nationwide had not been determined.
Medications to treat high blood pressure, cholesterol and diabetes will be among some of the drugs available at the new price. The discount applies to 314 different generic drugs, which contain the same active ingredients as their brand-name counterparts but are sold for less.
Officials from Target Corporation, the nation's second-largest retailer, stated in a news release on Oct. 5 that it would match Wal-Mart's new drug prices in all of the company's Florida pharmacies.
Spokesman for Walgreen Company Michael Polzin, one of the nation's largest drug store chains, said Walgreens stores would not change their drug prices to rival Wal-Mart's.
Polzin said 95 percent of Walgreens' prescription drug customers participate in the store's prescription insurance program, which prices some of its 1,800 available generic drug brands at just more than $5.
"We think that our convenient service and locations are a bigger factor in influencing which pharmacy to use than a small price change," Polzin said. "Our locations have proven to be a deciding factor in past years."
Polzin said since the start of Wal-Mart's program in Tampa, Walgreens stores in the area have not been affected. He said Wal-Mart's price reduction might be an attempt by the company to help its drug revenues.
"I think if you look at how their pharmacy business has been doing in the past year, they are trying to boost sales," Polzin said.
Wal-Mart has four stores in the Columbia area — two Wal-Mart Discount Centers, one Sam's Club and one Supercenter. The Discount Center at 401 N. Stadium Blvd. will close soon, and a Supercenter will take its place at 3001 W. Broadway. The new store is scheduled to open Oct. 18.