Barbaro, Michael. "Wal-Mart to Test Price Cuts on Range of Generic Drugs," New York

 

Barbaro, Michael. "Wal-Mart to Test Price Cuts on Range of Generic Drugs," New York
Times, 21 September 2006, p. C4.

Wal-Mart, the nation's largest retailer, will test a program to sell generic prescription drugs to its
workers and customers at sharply reduced prices, according to people briefed on the plans.

The giant discount chain, which has used its size to knock down the costs of toys, clothing and
groceries, will sell generic versions of about 300 widely prescribed drugs for as low as $4 for a
standard prescription, these people said, speaking on condition of anonymity because they were
not authorized to disclose details of the new program. On average, generic drugs cost between
$10 and $30 for a 30-day prescription.

The company, which is frequently criticized for its employee health benefits, is expected to
announce the program today. A company spokeswoman declined comment.

Wal-Mart will test the lower prices first in the Tampa, Fla., area and, depending on consumer
response, may expand the program around the state and the country, these people said.

The experiment appears to mark the first time that Wal-Mart has used its unrivaled influence in
the American economy to lower the cost of health care for its customers.

In the past year, the company has introduced several programs to improve its benefits for
workers, like extending insurance coverage to the children of part-time workers and starting a
benefit plan with monthly premiums as low as $11.

Still, critics complain that at Wal-Mart health insurance is out of reach for many of its 1.3 million
employees in the United States, forcing thousands of them to turn to state-sponsored programs or
forgo health coverage altogether.

Several states even considered legislation that would force the chain to increase its spending on
health care but only one such bill, in Maryland, became law. The law has since been struck down
by a judge and its future is in doubt.

For Wal-Mart, the lower generic drug prices could blunt criticism of its health care coverage and
prove a boon to business. Wal-Mart's chief executive, H. Lee Scott Jr., has identified the chain's
pharmacy business as an area that needs improvement, and $4 generic drugs could turn the chain
into a destination for those seeking the best prices on prescriptions.

It is unclear exactly how Wal-Mart obtained the lower prices. The chain has at times sold
products like toys at a loss to entice consumers. But given its size it is possible the company has
negotiated lower prices with health care providers and drug companies, industry experts said.

The new generic drug program is expected to be announced this morning at a Wal-Mart store in
Florida, with senior company executives and elected leaders in attendance.