Sep 27, 2006 2 min read

It may be a public relations gimmick, as some critics claim, but news that mega-retailer Wal-Mart plans to offer 300 generic prescription drugs for as little as $4 for a month’s supply has to be welcomed news to consumers. It isn’t the sheer volume of discounted drugs affected – the number is a fraction of the 1,500 to 1,800 generics offered by Wal-Mart competitors – but the concept of injecting competitive price-slashing that carries the greater long-term impact. It’s already well documented that prescription drugs cost less in Canada, yet U.S. prohibitions against their importation help keep pharmaceutical company profits high. And while Wal-Mart’s move won’t affect the higher cost of name-brand drugs whose patents haven’t run out, it does make certain popular generic drugs to control diabetes and high blood pressure more affordable.

How affordable? According to the Associated Press, analysts say that consumer will save from 20 to 90 percent. That’s a significant savings – and one that will no doubt force others, including rival Target Corp., to lower their own prices in order to compete. Even though profit margins on many of these generic drugs are already low, every little bit helps in most peoples’ pocketbooks these days, particularly those on fixed incomes.

Wal-Mart plans to start the new discounting program in the Tampa Bay area, expand it to the rest of Florida in January and introduce it nationwide by the end of next year. In anticipation of the new system, the company is working with 30 drug companies to help them be more efficient, using the company’s longstanding reputation as a cost-cutter to assist those firms in wringing out unnecessary costs.

Some may like that approach, others may not, but there’s no disputing the fact that Wal-Mart’s success is rooted in being able to sell products more cheaply than competitors. It’s model that is worth exploring in the drug business.