$4 drug program imitated, criticized

The $4 generic prescriptions Wal-Mart Stores Inc. is introducing at its stores around the country are causing a ripple effect in the big-box retail industry, spawning imitators like BJ's Wholesale Club , but drawing criticism from drugstores that say the discounts will not result in significant savings for most consumers.

Wal-Mart and BJ's, based in Natick, simultaneously unveiled discount pricing programs in Massachusetts yesterday. Wal-Mart has already introduced the generic drug program in 27 states since September and yesterday added 11 more, making the discounts available in over 3,000 stores.

Under the plans, both companies sell 30-day prescriptions for generic treatments at $4 apiece. Wal-Mart sells 331 drugs at the discounted price, and BJ's includes 292 in its program, which will be offered at stores in 10 states.

Consumer advocates and healthcare economists said that while lower prices will benefit some consumers, especially those without insurance, discount programs like BJ's and Wal-Mart's will not likely have a major impact on the retail drug industry because they exclude brand-name treatments and many generics. Of the 10 most-prescribed drugs in the United States as tabulated by IMS Health, a market research company, only the antibiotic amoxicillin is available for $4 at BJ's and Wal-Mart.

But Wal-Mart said that according to RxList, an Internet drug index, 4 of the top 20 prescribed medications in the United States are available for $4, including atenolol, a treatment for high blood pressure, and furosemide, a diuretic.

"It's going to save money for consumers, but there are just lots and lots of generic drugs that are not on the list," said Ron Pollack , executive director of Families USA , a nonprofit healthcare advocacy group in Washington.

At the pharmacy counter of the Wal-Mart in Weymouth yesterday, Quincy resident Ellen Riley said she welcomed the savings, no matter how modest, as she examined the four-page list of $4 generics with the aid of a large magnifying glass.

"Awesome," Riley said. "I just found seven of my medications on the list. I take 14 medications. Any way you can save a dollar on drugs, that's great."

Mary Scott and her husband, Richard, were at the Weymouth store to fill a $4 prescription for a cholesterol-lowering drug. Previously, they paid $124 for a 30-day supply, Mary Scott said.

"I can't believe it," she said. "I saved $120."

Walgreen Co. and CVS Corp., the nation's two largest drugstore chains, said they will not match the $4 generic prices. The chains said shoppers will realize that only a small fraction of generic medications are included in the Wal-Mart discounts.

They also are betting that customers with health insurance will be willing to pay a bit more, in $5 and $10 co payments, for more convenient locations and extra service, like 24-hour pharmacies. And seniors enrolled in the Medicare prescription drug plan already enjoy $3 co payments, Walgreen said.

Mom-and-pop drugstores, meanwhile, said they won't attempt to match the Wal-Mart discounts because generic drugs are crucial to their profits.

"The traditional pharmacies don't have bicycles and fishing poles to make up the margin," said Derick Anderson , pharmacist at J.E. Pierce Apothecary in Brookline.

Bill Simon , Wal-Mart's executive vice president of professional services, said the volume of $4 generics increased by an average of 60 percent compared to the previous year at stores that offer the discounts.

The volume increases held steady even when competitors like Target introduced similar programs, he said. The $4 generic drugs account for 30 percent of all prescriptions filled at Wal-Marts, he said. Since unveiling the discounts in Florida in September, the company estimates that it has filled 2.1 million more new prescriptions compared to last year, in states where the price cut is in effect.

"For us this is an opportunity to execute the Wal-Mart business model to the pharmacy business," Simon said. "Buy it well, move it efficiently, and pass the savings on to our customers."

Simon said the program was not intended to attract drug customers in the hope they would make other purchases while at a store.

"People filling their prescriptions in our stores with the $4 program were likely already Wal-Mart shoppers," he said.

Other major retailers are also introducing discount drug programs, though not yet in Massachusetts. Kmart last spring started selling 90-day generic drug supplies for $15 without insurance coverage. Target has begun selling $4 generics in Florida and says it plans to match Wal-Mart state by state. It did not respond to telephone calls seeking comment yesterday.

Regina Herzlinger , a healthcare economist at Harvard Business School , said there are tens of thousands of chain and community drugstores, vastly outnumbering big-box retailers. Shoppers will still vote with their feet and choose convenience, she said.

"Location, location, location," said Herzlinger. "The footprint of Wal-Mart is nowhere near as large as the drugstores."

Wal-Mart has attracted strong criticism from the National Community Pharmacists Association , a trade group for independent drugstores that is based in Alexandria, Va. It has analyzed Wal-Mart's list of discounted drugs and said that the count of 331 generic prescriptions is inflated because it lists the same drugs in multiple strengths. It has called Wal-Mart's move a "publicity stunt" aimed at boosting store traffic.

"There's over 5,000 generic drugs on the market," said Douglas Hoey , the association's chief operating officer.