Wal-Mart's generic drug plan contains obvious benefits

IN A WORD, WAL-MART Stores Inc.'s move to cut the price of a 30-day supply of many generic prescription drugs to $4 is brilliant.

As we report on page 1, Wal-Mart is launching the program in the Tampa Bay, Fla., area and plans to expand it early next year to the rest of Florida and later to other states.

The benefit to consumers is obvious. With the average cost for a month's supply of generic drugs at nearly $30, the savings to consumers will be substantial.

For Wal-Mart, the new generic drug pricing strategy also makes a lot of sense. First, Wal-Mart has reaped a public relations bonanza, no small benefit for a company that has been the target of much criticism in recent years for a variety of reasons, including the benefits it provides to workers.

Far more important than a PR boost--the benefit of which is typically temporary--is that rock-bottom pricing of generic drugs makes good business sense.

Unquestionably, $4 prescriptions will be a powerful lure for consumers to have their prescriptions filled at Wal-Mart stores where they are likely to buy other, more profitable products.

There are benefits to this new program that extend beyond Wal-Mart and its customers. Unquestionably, other big retailers, unless they want to lose business, are certain to respond, which means lower prescription drug prices will be more widely available.

Indeed, applying to prescription drugs Wal-Mart's well-known marketing strategy of "Always low prices. Always." is bound to shake up an industry whose motto could well be described as, "Always high prices. Always."

We also think that the publicity generated likely will encourage more employees to have, wherever possible, their prescriptions filled with a generic rather than a brand-name drug.

Given that the retail cost of brand-name drugs typically is several times higher than generics, the savings of to employees and to employers in making such switches would be substantial.

To that end, we would hope that Wal-Mart's move is a catalyst for employers to examine whether their prescription drug copayment tiers give employees sufficient financial incentives to opt for generics.

Given that generics must, under federal rules, have the same strength and quality and work in the same way as brand name drugs, greater employee use of generics is in both employees' and employers' best financial interest.