Retail Drug Wars Heat Up

January 22, 2009
Special Feature

In an effort to pull in new prescription drug customers, especially those without drug insurance, several big-name drug retailers are locked in a battle over who can provide the biggest discounts.

In an effort to pull in new prescription drug customers, especially those without drug insurance, several big-name drug retailers are locked in a battle over who can provide the biggest discounts. Walgreens, CVS, and Rite-Aid, and even some grocery store chains, have all unveiled deep discount programs on generic drugs and are promoting them aggressively.

All these retailers are following the lead of Wal-Mart, which introduced its discount generic drug program back in 2006. At the time, the giant retailer offered a one-month supply of many generic drugs for $4. Some retail drug chains are trying to up the ante with more attractive price cuts. Walgreens has introduced its Prescription Savings Club, which offers discounts on 5,000 brand-name prescription drugs as well as generics, with additional rebates on store-brand products. CVS is selling a 90-day supply of more than 400 generic drugs for $9.99 and throwing in a 10% discount at the company’s store-based clinics. Some retailers are also flirting with the idea of providing generic antibiotics free.

The price wars among retailers can have an impact on their bottom line, since generic drugs typically are high-margin products and a major profit center for the drug chains. In the meantime, the discount programs, which are primarily aimed at consumers with no prescription coverage, have had little effect on mail-order pharmacy benefit managers like Medco, Express Scripts, and CVS Caremark, which serve insured customers.