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Wal-Mart Sets $4 Price For Many Generic Drugs
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Wal-Mart's announcement roiled the retail drug industry. Shares of Walgreen Co. and CVS Corp., two large drugstore companies, fell more than 7 percent and 8 percent, respectively.
According to the Generic Pharmaceutical Association, 8,400 of the 11,167 drugs listed by the Food and Drug Administration are sold generically. The average price of a 30-day supply of a generic prescription drug was $28.71 in 2004, compared with the average price of a brand-name version at $95.54. The Congressional Budget Office has estimated that generic drugs save consumers $8 billion to $10 billion a year.
Mark McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said he did not think the Wal-Mart offer would siphon beneficiaries from the Medicare drug benefit, known as Part D. "Remember that the drug plans in Medicare already provide excellent coverage for generics," he said. "Many of the plans have generics for a dollar or two, or even free."
What the Wal-Mart plan does provide, he said, is a way for Medicare recipients to save more money after they reach the "doughnut hole." That's the point at which an individual's yearly drug cost reaches $2,250, and Medicare ends its subsidy. After that, a beneficiary has to pay $3,600 out of pocket before government subsidies kick in again.
In that interval, or gap, the Wal-Mart program could result in significant savings, given that the average Medicare beneficiary is expected to spend about $3,081 on prescription drugs this year, McClellan said.
Tovar, the Wal-Mart spokesman, said that the $4 price is available to anyone, but that Wal-Mart will try to collect insurance on prescriptions for people with prescription-drug coverage. However, some insurance contracts stipulate that pharmacies will not be paid the full cost of a drug unless customers pay the full co-payment the insurer requires.
Tovar said Wal-Mart will still allow insured customers to pay $4 per prescription, even if that is less than the co-payment required and even if that means Wal-Mart will not be paid any money by insurance companies.
Mohit Ghose, a spokesman for America's Health Insurance Plans, which represents providers of insurance of all types, including for prescription-drug coverage, said the typical co-payment for a generic prescription is $5 to $15. He said it is unclear how the Wal-Mart plan will affect insurance coverage.
Staff writers Ylan Q. Mui and Christopher Lee contributed to this report.
