Newark Star-Ledger examines effect of Wal-Mart generic drug discount program on pharmaceutical industry

Apr 24 2008

The Newark Star-Ledger on Tuesday examined how analysts say the "overall impact" of Wal-Mart Stores' generic prescription drug program on the pharmaceutical industry "has been relatively small" (Cohen/Fitzgerald, Newark Star-Ledger, 4/22).

The program, which began in September 2006, offers discounts for 361 prescriptions that represent different formulations of 157 generic medications. Most of the generic medications cost $4 per 30-day prescription, although several family planning treatments cost $9 (Kaiser Daily Health Policy Report, 3/18).

Wal-Mart has said that the program saved customers more than $1 billion in 2007 and that 30% of customers who purchased generic medications through the program were uninsured. According to the Star-Ledger, it is "clear Wal-Mart's generic discount program has benefited consumers with low incomes or without insurance; forced some competitors to respond with similar discount plans; and has been a factor in the overall trend toward increased usage of cheaper generic drugs."

Drew Nannis, a spokesperson for AARP, said that "making drugs affordable is a positive development," but he added that the Wal-Mart program and similar programs operated by competitors do not address the "dramatic increase we see on the brand-name side of things." Sales of brand-name medications totaled $286.5 billion in 2007, and the average price of brand-name treatments increased by 7.4%. In contrast, the average price of brand-name and generic medications combined increased by only 1.4% in 2007, largely driven by the wider availability of generic treatments, according to Bureau of Labor Statistics.

The Star-Ledger also examined how since the program started, Wal-Mart has experienced an increase in the number of lower-income customers using its pharmacies. However, other pharmacies said they do not believe the program is drawing customers away (Newark Star-Ledger, 4/22).