Wal-Mart's Discount Drug Program Goes Statewide in Florida
Oct. 5, 2006 — -- Wal-Mart said today it would offer more than 300 discounted generic prescription drugs throughout Florida starting on Oct. 6, months ahead of its previous plan to take the program statewide by January 2007.
Under the plan, Wal-Mart would sell a 30-day supply of certain generic prescription drugs for a flat fee of $4 per drug. Examples include the antibiotic Amoxicillin, the anti-inflammatory Naproxen and the anti-depressant Fluoxetine.
Wal-Mart started the pilot program two weeks ago in 65 Tampa, Fla., area stores. At that time, Wal-Mart said the low-price generic drug program would roll out slowly as the mega store gauged customer demand and ensured adequate staffing and supplies at the pharmacies.
Strong prescription drug sales in the days after the pilot program began, along with requests from Florida state officials, convinced the company to speed up the plan, according to a Wal-Mart spokesman.
Today's announcement came at a Wal-Mart store in Orlando, Fla., with Gov. Jeb Bush in attendance.
"Part of this is about saving these customers money, but even more important, it's about making sure they get the medicines they need to live healthier lives," CEO Lee Scott said in a prepared statement.
Customers: 'Yes!' Competitors: 'So What?'
A day after the initial September announcement, Wal-Mart customer Christine Downing said the lower-priced drugs would make a "huge difference" and would save her family "hundreds of dollars."
Wal-Mart competitor Target quickly followed suit, announcing it would match Wal-Mart's prices.
But immediate reactions from other competitors were mixed. Walgreens and CVS -- which rank No. 1 and No. 2 in U.S. pharmacy sales -- dismissed the price cuts.
Matt Leonard, senior vice-president of pharmacy at CVS, said then that the drugs that Wal-Mart was offering "represented less than 10 percent of the more than 3,000 unique generic products that we stock."
Wal-Mart and Generics
Today Wal-Mart said customer response to the program was considerable. Executive Vice President Bill Simon told reporters on a conference call that in the first 10 days, Wal-Mart's pharmacies filled 36,000 new prescriptions. That represents four times the usual number of new prescriptions filled during a normal 10-day period, according to the company.
"Wal-Mart can play a unique role in responding to the needs of our customers who struggle for too long to pay for prescription medicines," Simon said.
In addition to expanding the program to 235 stores throughout the state, Wal-Mart also increased the number of available low-priced prescriptions to 314, including 143 different individual drugs. According to Wal-Mart, that represents 30 percent of the total prescriptions the company fills in Florida.
Previously, the company had announced 292 prescriptions representing 129 drugs would be offered. Some of the additional drugs included the cholesterol-fighting drug Lovastatin and the cancer drug Megestrol.
Wal-Mart and Health Care
Wal-Mart's increasing focus on health care comes after the company has come under criticism for the health care plans it offers its own employees.
Buffy Wicks, the political director of WakeUpWal-Mart.com, a union-backed organization that has fiercely criticized the retailer, said in a statement, "It is outrageous that Wal-Mart and Republican Gov. Jeb Bush would stand together and talk about health care when Wal-Mart fails to provide company health care to over half of its employees."
Simon said the company's actions would help make health care more affordable to customers and employees.
"We can do that by doing what we do best, and that's driving cost out of the system so that consumers can benefit," he said. "And we can do that in a way that introduces competition to an area where there hasn't been enough of it"
Many health care analysts agreed. Ted van Biesen, a partner in Bain & Co's global health care practice said in September: "This approach is consistent with Wal-Mart's historical pressure that it applies on its supply chain, and this is consistent with what they've done for example, toys and clothes and consumer products."
Van Biesen said the current program won't immediately solve the issue of expensive prescription drugs but added that "longer term, I think we are going to see an increasing pressure by national retailers on the entire generic distribution chain."
Slow Sales
Today's news comes after Wal-Mart reported lackluster sales for the month of September. Sales for stores opened at least one year were up only 1.3 percent, at the low end of the retailer's forecast of sales growth between 1 percent and 3 percent.
The company said that year-over-year sales numbers were negatively affected by strong sales during last year's hurricane season. In addition, Chief Financial Officer Tom Schoewe said clothing sales failed to meet expectations in September.
By contrast, other retailers reported Thursday surprisingly strong sales for the month of September, fueled in large part by gas prices averaging 21 percent less than a year ago.
Attention Shoppers
A day after Wal-Mart announced the generic prescription program in Tampa, CEO Lee Scott participated in a panel discussion at the Clinton Global Initiative in New York. When asked about the low-priced drugs, he said, "If that's all we sell, we're gonna lose some money, but we think it'll drive enough traffic and it'll send a strong message out there that by golly, if you want to save money on prescription drugs, Wal-Mart's the place to shop."