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    Wal-Mart to Sell Generics for $4 a Prescription

    BENTONVILLE, Ark. - Wal-Mart's latest move is likely to give supermarket pharmacy execs severe headaches: the chain said yesterday it will make nearly 300 generic drugs available for just $4 per prescription, for up to a 30-day supply at commonly prescribed dosages.

    BENTONVILLE, Ark. - Wal-Mart's latest move is likely to give supermarket pharmacy execs severe headaches: the chain said yesterday it will make nearly 300 generic drugs available for just $4 per prescription, for up to a 30-day supply at commonly prescribed dosages.

    The program, which officially launches today, serve both customers and associates of the 65 Wal-Mart, Neighborhood Market, and Sam's Club pharmacies in the Tampa Bay, Fla. area, and will be expanded to the entire state in January 2007. What's more, Wal-Mart said it intends to take the program to as many states as possible next year.
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    "Each day in our pharmacies we see customers struggle with the cost of prescription drugs," said Wal-Mart c.e.o. H. Lee Scott, Jr. in a statement. "By cutting the cost of many generics to $4, we are helping to ensure that our customers and associates get the medicines they need at a price they can afford. That's a real solution for our nation's working families."

    Commenting on Wal-Mart's new initiative, U.S. Senator Bill Nelson (D-FL), noted, "Because Wal-Mart has the ability to shape the market, maybe other retailers will follow suit."

    Richard D. Hastings, v.p. and senior retail sector analyst for New York-based Bernard Sands LLC, praised Wal-Mart's move as "possibly the most forceful supply chain move by Wal-Mart in years," and "another example of how and why Wal-Mart's impact upon the economy remains as powerful as ever."

    Hastings observed that the initiative could improve customer loyalty and foot traffic trends over the long term.

    "By reducing annual prescription spending on this scale, within their customer base, they could be freeing up some bucks to spend on other general merchandise in other store departments," Hastings said. "The key is to get them in, and keep them shopping in other departments. We'll wait and see if this works, but it will take up to two years to know if this has helped with cross-departmental traffic and conversion."

    Hastings also predicted that while big chain drug companies, such as Walgreens and CVS, will be able to respond to Wal-Mart's initiative, smaller prescription drug buyers, including certain supermarket chains that offer pharmacy services, will see some margin erosion if they are forced to compete on price.

    "This move represents another piece of evidence that the new Wal-Mart is trying to do more than just think about costs," he said. "They are trying to connect the dots between their customers, their employees and their communities, and trying to make a new image for themselves. They are moving in the right direction."

    Wal-Mart said key components of the program include:
    -- The $4 pricing will be available to all pharmacy customers with a prescription from a doctor that can be filled with a covered generic medicine.
    -- Insurance will be accepted.
    -- The program will also be available to the uninsured.
    -- The initiative at present covers 291 generic medications, from many of the most common therapeutic categories.
    -- The medicines represented are used to treat and manage conditions including allergies, cholesterol, high blood pressure, and diabetes.
    -- Some antibiotics, antidepressants, antipsychotics, and prescription vitamins are also included.

    Wal-Mart added that it expects the program to help alleviate challenges for seniors who have fallen into the "doughnut hole" coverage gap in their Medicare Part D prescription drug plans, and now find themselves responsible for paying 100 percent of their prescription medicine costs.

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