Friday, October 20, 2006

Jeff Milchen and Stacy Mitchell: Wal-Mart's Bait-and-Switch on Generic Drugs

Wal-Mart's Bait-and-Switch on Generic Drugs
by Jeff Milchen and Stacy Mitchell
Hometown Advantage

Even with its massive marketing and PR budget, Wal-Mart could not buy advertising as powerful as these headlines. Over the last few weeks, hundreds of newspapers have run stories on the chain's new generic drug pricing initiative under sweeping titles like this one from the Chicago Tribune: "Wal-Mart to sell generic drugs for $4 a month."

Consumers appear to have gotten the message. Only 13 percent currently get their prescriptions at a mass merchandiser. But, according to a new Wall Street Journal Online/Harris Interactive poll, 50 percent of consumers now say they are likely to turn to Wal-Mart and Target, which has announced a similar program, for medications.

But the media coverage has been grossly misleading. Few journalists have closely examined Wal-Mart's initiative, which is far more limited than most news accounts have led people to believe. Here are the facts:

Although the program has been touted in newspapers nationwide, for now the special pricing is available only at Wal-Mart stores in Tampa, Florida. The chain has said it will expand some of the pricing to some stores in other regions later this year.
There are thousands of generic drugs, but Wal-Mart has said it will offer the $4 per month pricing on only about 300 of them.

This list actually includes fewer than 150 different drugs. That's because Wal-Mart counted different dosages of the same drug separately, including four versions of ibuprofen and a dozen of the antibiotic amoxicillin.
Quite a few of these drugs, like the ibuprofen, are already widely available for $4 or less.

Many older medications are on the list, while newer replacement medications that work better or have fewer side effects are not included. For example, Wal-Mart includes only one of the generic statins used to treat high cholesterol. It's the oldest one and the one with the worst side effects.

Wal-Mart's program is a classic bait-and-switch, according to the National Community Pharmacists Association. People will go to Wal-Mart expecting to save money on their prescriptions, only to end up paying full price in most cases and probably also leaving the store with other merchandise that carries an even higher profit margin.

To Read the Rest of the Report

2 comments:

Susannity! (Susanne) said...

That's always been the strategy of Walmart hasn't it? They sell some of their products below cost in order to entice people in with the illusion of grand savings and then make large profits on certain items as well as quantity. Their strategy is also not to bring new people into their stores - I think the last thing I read said something like 85% of Americans go into a Walmart at least once a year. What they do is try to have their customers spend more while there.
I'm still boycotting Walmart. I am happy that they have increased employee wages and bennies a little bit, but they have a long way to go still to even get on par with Costco for example.

Thivai Abhor said...

Of course out where I am they get people twice because there are no Costgo's, but there are Sam's membership stores (owned by Wal-Mart)... of course in my opinion they don't compare to Costco (still when they are the only option for some people they are going to take it).

I'm with you on boycotting WM