Generic medication discounts from retailers seek to limit patients' out-of-pocket cost-sharing

Wal-Mart recently announced a pilot program in Florida to sell 30-day prescriptions of approximately 300 generic medications for $4 each. At press time, Wal-Mart announced it will be rolling out the $4 generic prescription program in 26 additional states-3 months earlier than expected-reportedly because of consumer demand. Wal-Mart said 88,235 new prescriptions were filled in the 10 days after the initial rollout.

Target announced immediately that it would match Wal-Mart's $4 price on approximately 150 generic drugs in the Tampa, Fla, area and throughout the state by the end of January. Meanwhile, Kmart reminded consumers about an existing plan it has offered since May-a $15- per-90-day-fill generic plan that covers more than 185 medications and is expanding.

Fred's Inc, a discount general merchandise retailer in the southeastern United States, also plans to launch a pilot generic drug pricing program in select locations in the Memphis, Tenn, area. It will sell 300 generic drugs used to treat diabetes, colds, infections, asthma, and cardiovascular disease at $4 per prescription for a supply up to 30 days.

"The increased publicity about generics, in general, will likely lead to an overall increase in generic utilization," said Ron Kocher, a pharmacy benefit consultant at the Irving, Texas, office of Pharmaceutical Strategies Group (PSG). "For managed care executives and health plan administrators, the play by Wal-Mart and others can assist in improving patient awareness about-and acceptance of-low-cost generic alternatives."

In July, a new $0 co-pay generic program began for members of Minnesota small group plans and members of some large self-insured plans under Blue Cross and Blue Shield of Minnesota. "[The Big Three retailer moves] are validating what we've been doing," said Al Heaton, Blue Cross and Blue Shield of Minnesota pharmacy director. "We are saying that generics are a great value, and we are pushing the envelope. Free is a pretty potent incentive for our members to choose generics."

Heaton said that other plans will likely be examining a $0 copayment for generics. "If there's a generic available, this is a way of having a patient get on and stay on a drug," he said. "We have also found that co-payments might get in the way of therapy persistence."

Meanwhile, Independence Blue Cross (IBC) will roll out its 3-month "No Pay Co-pay" waiver on generic drugs January 1. "Our efforts are congruent with the industry and retailers-we're encouraging the use of generic drugs to provide the highest quality, most effective benefit possible," said Paul Urick, PharmD, vice president of pharmacy services at IBC. "The market is responding to what customers are asking for."

Pharmacy benefit manager (PBM) Medco Health Solutions recently announced the Generics First insured generics drug plan for small to mid-sized businesses that are under- or uninsured. With the program, the member pays either the retail pharmacy price or the $10 co-pay, whichever is less. A Medco spokesman said the program is not in response to the retailer announcements, but exists as "part of Medco's broad-based program to increase generic drug acceptance and usage."

CONSUMER INFLUENCE

Some analysts believe these generic drug programs are evidence of consumerism taking flight, as well as the increasing competition among retailers.

Although customers may be disappointed when they find their generic drugs are not included on the limited list of products available, "these initiatives bring attention to the need for increased patient involvement in the decisions made about their care and the use of generics in order to achieve clinical and cost-effective treatments," Kocher said.

"Consumer-driven health plans and pass-through pricing at retail will help to drive members to these lower-cost pharmacies and the use of generic drugs, especially if members can view individual pharmacy pricing of prescription products online. Since many mail-order operations focus on generics to make money, how will the mail-order cost of these generics compare with the $4 price at Wal-Mart? What questions will members raise?"

In addition, these discounts might be attractive to seniors, who, at some point, could find themselves in the "donut hole," or that portion of the Medicare Prescription Drug Plan in which the beneficiary will not have coverage, said Alex Gilderman,PharmD, vice president of clinical programs at Ventegra.

The competition among large retailers is causing new evaluation of the "loss leader" concept, in which retailers sell certain items at a loss to bring customers into the store where they'll purchase other items, said Ben Zelman, vice president, pharmacy management and business development at Medical Mutual of Ohio.

EFFECT ON OTHERS

Upon initial review, Walgreens does not believe that these types of programs will significantly affect its business, Walgreens spokesman Michael Polzin said. "Nearly 95% of our pharmacy patients have prescription insurance coverage, meaning they're responsible only for a small co-pay," he said. "For the 291 drugs that Wal-Mart will sell for $4, the average co-pay at Walgreens is $5.30. And for Medicare Part D patients, it's only $3.18."

Also, Polzin said: "Wal-Mart's program covers fewer than 300 generic medications, while our pharmacies stock about 1,800 different generics. Over the years, our convenience, locations, and services have proven to be bigger factors for our patients than a few dollars in price difference. So we expect to remain very competitive in the generic market."

Some experts believe there will probably be little effect on brand manufacturers.

"The newer generics on the market-the focus of manufacturers-are not included in the Wal-Mart program," Kocher said. "The generics included are well-established generics with multiple manufacturers. These initiatives... will have to evolve and expand in dramatic fashion before brand manufacturers have concerns and take action other than to reinforce the value of brands in advertising to the public."