Wal-Mart broadens drug promo

The expansion Thursday of Wal-Mart's generic drug program seemed only incremental. The company added seven new compounds to the list of drugs it sells for $4.

But the announcement may give a glimpse of the future at Wal-Mart pharmacies. The company seems to be reaching out to a younger and broader drug clientele as it tries to expand its piece of the nation's $250 billion retail pharmaceutical market beyond its current share of 5-6 percent.

Many drugs previously on the Wal-Mart plan were heart, high blood pressure and diabetes drugs commonly used by older people. But Thursday, the company added to its $4 list methylphenidate, a drug for attention-deficit/hyperactivity disorder commonly used for school-age children.

More significant, Wal-Mart said it would start selling generic versions of two popular birth-control pills for $9 a month, appealing to an estimated 11 million women in America, most of them under age 40.

A fertility drug, clomiphene, also will be available for $9, Wal-Mart said.

Versions of the two birth-control pills — known by brand names Ortho Cyclen and Ortho Tri-Cyclen — account for 20 percent of oral contraception prescriptions in this country.

Although the average woman would save only $1 at Wal-Mart if she had insurance coverage for the pill, she would save $21 if she doesn't have coverage. The pills frequently sell for $30.

Establishing a new $9 price point for certain generics may prove a key step, according to analysts, some of whom have considered Wal-Mart's pharmacies an under-used asset.

"What they've done here is, they've gotten a bit more aggressive in creating a second tier," said Ronny Gal, who follows the generic drug industry for Sanford C. Bernstein & Co. "This is a very important development. Rather than just sell for $4 and be stuck with only the cheapest generics, they've now created a tier, and they have a business model for more expensive generics, as well."

Gal predicted the company might add more drugs to the $9 list and create a third, higher-priced, tier.

Wal-Mart announced the program's expansion Thursday. The discounts have prompted similar steps by other retailers, including Target, which said it would match Wal-Mart's latest moves.

Government economists recently credited the discount pricing plans with contributing to a slowdown of inflation in the Consumer Price Index for prescription drugs, which is running at about 1 percent, a three-decade low. Still, two of the nation's largest prescription drug retailers, Walgreens and CVS, have said the Wal-Mart promotions have not affected their businesses, and they have not matched the discount prices.

In a conference call with the media and investment analysts Thursday, Wal-Mart's chief operating officer, Bill Simon, estimated the company has saved shoppers and the nation's overall health care system $610 million since the program began last year. The company said its generic plan would cover 361 prescriptions representing various formulations of 157 medications, an increase of about 24 prescriptions.

Wal-Mart said its $4 program covered about 40 percent of the prescription drugs sold at its Wal-Mart, Sam's Club and Neighborhood Market pharmacies.

Wal-Mart has sought competitive bids from generic manufacturers for at least some of the products, enabling it to still make money while selling the generics for $4.

Two drugs added to its list Thursday, versions of the heart medication Coreg and the nail-fungus drug Lamisil, only recently became available as generics. Generic drugs are typically sold at small discounts after their approval before falling to as low as 10 percent of the original brand-name drug cost after a year. In this case, generic Coreg and Lamisil have been heavily discounted early because of competition among the numerous generic manufacturers that received FDA approval to sell them.

Coreg, used to treat congestive heart failure and hypertension, became available as a generic this month. Wal-Mart, which said the brand-name version had been $119 just a month ago, said its availability for $4 meant customers would save $115 a prescription. On the Internet, prices for generic versions range from $37 to $102.

Wal-Mart said savings on the generic version of Lamisil would be extensive, comparing its $4 price with an average price a month ago of $337 for the branded version. Some retailers are now selling the generic version as low as $45.

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