Remember When: The $4 generics battle was in full swing

December 19, 2016

Below-cost reimbursements still a concern for pharmacists.

Christi Davis Gallagher called it a billion-dollar price saver. Kevin Currans described it as a business killer. Both were talking about the generics price war detailed in August 2008 Drug Topics supplement story, “Four-dollar pricing considered boon and bust.”

The story chronicled the move by giant retailers such as Wal-Mart, K-Mart, and Target to dispense generic versions of medications for as little as $4 per prescription. Many pharmacists called the movement loss-leader pricing, and feared it would put many pharmacies out of business.

Boon or bust?

Gallagher, then the senior communications manager for Wal-Mart, told Drug Topics that the retail giant’s $4 prescription program had proven even more successful than anticipated. “Since its launch in September 2006, the program has saved Americans more than $1 billion,” she said. “To give you some perspective of how this impacts the total business, health and wellness, was 9% of our sales for fiscal year 2008.”

However, Currans, a pharmacist at an independent in Sleepy Eye, Minn., described the $4 movement as a predatory business killer. He told Drug Topics what happened after Wal-Mart opened a store 13 miles away from his store. “Business dropped overnight. I started calling customers and reminded them I’ve known them for years, go to their kids’ ball games, open at night if they need drugs after a trip to the ER. Some came back. A lot didn’t.”

 

Below-cost reimbursements still a concern

Fast forward to 2016. Low-cost generics have become a staple of pharmacies. And the issue remains a top concern of community pharmacists. A 2015 survey by the National Community Pharmacists Association (NCPA) listed below-cost reimbursements for some generics and Medicare drug plans that exclude community pharmacies as the top concerns of its members.

Earlier this year, Mississippi passed a law authorizing pharmacies to refuse to provide drugs or services if it is not paid more than acquisition cost. Those supporting the law, especially independent pharmacists, believe it will help them stay in business.

 “An independent pharmacist is a small business owner. But he or she is also a healthcare provider,” said, Robert H. Dozier, executive director of the Mississippi Independent Pharmacies Association. “At the end of the day, most pharmacists are going to take a loss instead of denying someone medication they need.” 

 

 

 

 

 

 

 

 

 

 

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