$4 Generics Revisited

     Is it time to re-evaluate the $4 generics idea?  Should pharmacies drop this pricing structure entirely? 

     Someone recently asked me what I thought retail pharmacy will be like towards the end of my career.  The assumption is that I still have many years to go before my time as a pharmacist is over.  I sure hope that I’m looking far into the future when I think about my retirement. 

     I jokingly wondered out loud if there would still be $4 generics at that time.  I also wondered if there would be anything else you could buy at that time for only $4.  My guess is that inflation will have something to say about the buying power of the dollar at that time. 

     Walmart’s bold pricing model was a bit of a shock to the retail pharmacy system when it was announced.  Several competitors followed their lead and started their own $4 generic lists back when Walmart first introduced this pricing strategy.

     To me it always felt like the corporate world’s version of peer pressure when this happened.  Everyone seemed to scramble and match Walmart’s aggressive pricing.  But in the long run, it has hurt the industry.   The consequences of pricing prescriptions so low were never really discussed. 

     But now pharmacies are faced with an ultra low margin business where prescriptions are sold for next to nothing.  This can’t be good for the long term health of community pharmacies.   Businesses can’t survive a very long time by giving away their products or services.

     Is it finally time to revisit the whole $4 generic concept?  Should community pharmacies still have this value menu mentality when it comes to generic drug prices?   What does this aggressive pricing say to the customer?  Does it imply that our services are valuable and important?  I think not. 

     My employer recently removed a handful of medications from our $4 generic list.  The acquisition cost for those medications rose to a point where it simply didn’t make financial sense to continue to sell them for $4.

     I would imagine this is only the beginning.  Once drug prices continue to rise in cost, companies will have no choice but to pass on those price increases to the consumer. 

     But it’s those same consumers that demand rock bottom prices.  We’ve trained patients to think of prescriptions as a commodity.  Why would these patients willingly pay more? 

      My hope is that pharmacy retailers would begin to faze out the $4 generic list and simply let those companies that are foolish enough to maintain it fail.  But consumers are sensitive to price increases.   Would they adjust to the idea of eliminating $4 generics? 

     We don’t have to follow Walmart to the bottom of another industry.  Can’t we let them fail on their own?

     Is it wishful thinking to think that the $4 generic list will magically go away any time soon? Probably, but that doesn’t mean it isn’t a good idea. 

     I don’t want to sound like a cold pharmacist who wants patients to pay more for their medications.  But patients have to realize that there is a cost associated with doing business.  And $4 generic drugs will not cover those costs. 

     It’s time to revisit the $4 generic idea.  It’s time to look at a new pricing structure for generic medications.  We can’t continue down this path can we?

The Redheaded Pharmacist

1 Comment to “$4 Generics Revisited”

  1. By Pharmaciststeve, February 12, 2013 @ 9:52 am

    You must look at the entity that created this concept.. How many zeros are there between the decimal point and the number that represents the per-cent of the total store’s volume does the Rx dept represents? How many horror stories have we hear of this company opening stores in small towns/areas and watch many/most/all of the locally owned businesses close their doors.

    IMO.. WM .. is a bottom line business … nothing else matters… It is all about getting people thru the front doors. They are eliminating drive-thru windows.. just proves that fact… and I have seen very little about their mail order program being promoted.

    it is reported that they have a very high per-cent of their employees on Medicaid/food stamps.. so the government/tax payer is supplementing their bottom line.

    For anyone to believe that any of these large for profit companies has one concern about “the pharmacy industry”… does not understand the mindset of companies that are listed on the stock market and have to answer to the market and stock holders.

    With more people having insurance with the implementing of Obamacare… depending on deductibles and co-pays there may be less and less incentives to have such programs.


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