ALEX COHEN, host:
Now, we go to a story about cheap drugs.
Wal-Mart thrilled customers a while back when it started offering prescription drugs at the low price of four bucks a month. The mega-retailer just added a couple of dozen more medications to their list of bargains and now other stores are beginning to take note.
NPR's Joanne Silberner reports.
JOANNE SILBERNER: Wal-Mart kicked things off a year ago, offering a short list of drugs that had come off patent at a special $4 per month price. The company test-piloted the program at some of its Florida pharmacies. Now all of its drugstores offer several hundred generic drugs for $4 per month.
And the company is now going even further, says Wal-Mart senior vice-president John Agwunobi. He's a former assistant secretary for health for the federal government.
Dr. JOHN AGWUNOBI (Senior Vice President, Wal-Mart): We're adding medicines for glaucoma. We're adding medicines for attention-deficit disorder and attention deficit. We're adding medications for fungal infections and for acne. We're also adding medications for fertility and prescription birth control.
SILBERNER: Those last two will go for $9 a month, not $4. For some people who's generic drugs only cost $5 or $10, that's not much savings. But there are big savings for certain drugs, especially those that have recently become available as generics.
And on a national level?
Dr. AGWUNOBI: We believe that in its first year alone, Americans saved $610 million. We took $610 million out of the health care costs of our nation.
SILBERNER: Pharmacies have always had a bigger percentage of profit on generic drugs as compared to brand-named drugs. So there's room for some price-cutting.
Health economist Stewart Altman of Brandeis University says the move won't hurt the big chain drugstores.
Mr. STEWART ALTMAN (Brandeis University): You're dealing with very big chains like CVS and Walgreen's for the most part; they're very big and they have the ability to sort of counter this as they choose.
SILBERNER: And in fact many of the big chains followed Wal-Mart last year and started offering their own discounts. But Wal-Mart's move will hurt the smaller pharmacies, Altman says.
Mr. ALTMAN: Well, little guys, you know, they're hanging on with their fingernails and so any loss in profits for the little drugstore is a problem. There aren't too many of them left, by the way.
SILBERNER: And there's another group that should worry, says Princeton economist Uwe Reinhardt.
Dr. UWE REINHARDT (Princeton University): If I were a brand name producing research-oriented company, I would worry about it. Because here you have a great free enterpriser teaching Americans that generics are just as good as brand-named drugs.
SILBERNER: Wal-Mart has been getting more involved in health care after taking a PR beating for offering only meager health insurance to its employees. Recently it expanded the options. And for consumers, it's opened onsite medical clinics at some of its stores and plans to open hundreds more.
Reinhardt says the company may be taking aim at the entire health care system.
Dr. REINHARDT: I think it's rather a fascinating way to come out of the corner with the boxing gloves and really slug the system. At the moment, the punches are still sort of like in an early boxing match, where the body blows don't hurt. But they add up. And so I am watching this with great fascination and expect more from them.
SILBERNER: Following Wal-Mart's announcement yesterday, the price of shares in the company rose slightly.
Joanne Silberner, NPR News.
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