Wal-Mart Stores Inc. is expanding a program offering $4 prescriptions for some generic drugs to 14 more states, two weeks after rolling out the low-cost program in Florida, the world’s largest retailer said Thursday.
Analysts said the main benefit for Wal-Mart is in drawing more shoppers into its stores who may come for prescriptions and then stay to buy in other departments.
“It must be working for them. They must be seeing a benefit if they’re expanding this rapidly,” said Richard D. Hastings, senior retail analyst with Bernard Sands LLC.
Reaction from Wal-Mart’s big chain rivals was mixed.
Target Corp., the no. 2 discounter behind Wal-Mart, said it will match the discount in all the same states except Alaska and Vermont, where it does not have stores.
Target, based in Minneapolis, said in a statement the move was “consistent with our long-standing practice to be price competitive with Wal-Mart on like items in local markets.”
Other chains said they would not change prices that they contend are already competitive, especially for people with insurance who only foot the cost of a co-pay.
“Wal-Mart’s limited price promotion is in response to the increasing number of seniors choosing Walgreens for their pharmacy needs. Therefore, Walgreens will not match Wal-Mart’s promotion,” Deerfield, Ill.-based Walgreen Co., the nation’s largest drugstore chain by sales, said in a statement.
Kmart, which is part of Sears Holding Corp., noted that it started offering 184 generic prescriptions in May in all its 1,100 pharmacies nationwide for $15 for a 90-day supply and would stand by that program.
Wal-Mart’s plan covers a month’s supply of 314 prescriptions. That number is made up of 143 drugs in a variety of dosages and solid or liquid forms.
Wal-Mart held news conferences in states from Vermont to Alaska to announce the move as it speeds toward national coverage by the end of the year. Wal-Mart will continue to expand into other states “as quickly as possible,” although regulatory and legal hurdles may slow the move in some states, company spokesman Dave Tovar said.
Wal-Mart first launched the program in the Tampa area two months ago, then expanded it to all of Florida two weeks ago in what it called an effort to save working Americans money on health care.
“Since we began the program in September, we’ve been committed to bringing it to other states as soon as possible,” Wal-Mart Chief Executive Lee Scott said in a statement.
Health care experts said any price competition is welcome but noted that generics are less of a burden to consumers than higher-priced brand-name drugs that are still under patent.
Critics, including rival non-chain pharmacies, said the plan covers only a fraction of a prescription drug market that includes about 8,700 generics approved by the FDA.
“This is a public relations stunt meant to drive foot traffic. Most people will find their prescriptions do not fall under the $4 plan,” said Charlie Sewell, senior vice president of government affairs at the National Community Pharmacists Association. The NCPA says it represents about 24,000 non-chain pharmacies.
At one of the Wal-Mart news conferences in Little Rock, Ark., Tony Nation, regional pharmacy manager for Arkansas and Missouri, recounted stories of customers hugging pharmacists in Florida after the $4 plan began.
“No one company, no one group can solve the problems facing our health care costs,” Nation said. “But this program is a start.”
In Vermont, Bernard Shatney, 64, of Cabot, said he doesn’t have health insurance and drives to Canada for generic blood pressure medication.
He spends about $150 a month in Canada and $400 monthly in the U.S. for his five prescriptions.
“That’s a big help,” he said of the Wal-Mart discount. “When you’re on Social Security, you’re limited where you can go. I’ve got to eat.”
It is the latest health care initiative by Wal-Mart since late last year, as the nation’s largest private employer seeks to deflect union-backed criticism of its worker benefits.
Union-backed WakeUpWalMart.com said Wal-Mart was just trying to deflect attention from criticism that it provides skimpy health care plans for its more than 1.3 million U.S. employees.
“Wal-Mart must address its own health care crisis, because the fact is all the low-priced drugs in the world won’t help the 775,000 Wal-Mart workers and families that are left cruelly uninsured,” WakeUpWalMart spokesman Chris Kofinis said.
Wal-Mart’s program was extended Thursday to the following states: Alaska, Arkansas, Arizona, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.
Wal-Mart shares rose 14 cents to close at $48.49 on the New York Stock Exchange.