GENERICS PROGRAMS TAKE SHAPE AT GROCERY

WENDY TOTH / MARK HAMSTRA

RAND RAPIDS, Mich. - Within days of Wal-Mart Stores' surprise announcement that it would expand its $4 generic prescription drug program to 14 states, supermarkets and other retailers were looking for ways to respond.

Some, like Meijer here and H.E. Butt Grocery Co., San Antonio, announced plans that had already been in the works. Wegmans Food Markets, Rochester, N.Y., and Giant Eagle, Pittsburgh, also are reportedly mounting special generics programs. Bashas', Chandler, Ariz., had said it had a long-standing program that offered a better deal than Wal-Mart; and Publix Super Markets, Lakeland, Fla., said it would match Wal-Mart's prices when requested by customers.

Target, Minneapolis; Costco, Issaquah, Wash.; and Fred's, Memphis, Tenn., said they would match the generics prices of the Bentonville, Ark.-based giant. BJ's Wholesale Club, Natick, Mass., is matching the pricing in some states. Kmart, Hoffman Estates, Ill., had reported an existing plan that offered 90-day supplies of some generic drugs at $15.

Drug chains like Walgreen Co., Deerfield, Ill.; Rite Aid Corp., Camp Hill, Pa.; and CVS Corp., Woonsocket, R.I.; and supermarket operator Food Lion, Salisbury, N.C., said they would not meet Wal-Mart's pricing. Other major supermarket chains contacted by SN did not respond to queries about their plans.

As of Oct. 19, Wal-Mart expanded a program offering a 30-day supply of select generic prescription drugs for $4 to Alaska, Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.

Wal-Mart launched the program in Florida in September and originally planned to expand to as many states as possible beginning in 2007, but said consumer demand led to an accelerated launch.

H-E-B, Meijer and Wegmans have three of the most distinctive pharmacy programs to counter Wal-Mart.

Meijer is offering seven oral generic antibiotics free of charge in all of its 176 stores.

"It is a good time for consumers," said Mark Murray, president, Meijer, in a conference call announcing the free plan. "Based on the decision Wal-Mart has made, some people have come back with similar reactions and some with different reactions. We just keep trying to serve our customers."

Giant Eagle is reportedly matching Meijer's offer in the Columbus and Toledo, Ohio, markets, offering seven generic antibiotics free, but adding four cough-and-cold medications.

Meijer's approach is aimed at generic antibiotic prescriptions used commonly to treat children, although many of these formulas are used to treat adults as well, he said. The drugs chosen represent more than 70% of the prescribed generic antibiotics filled annually by Meijer and more than 50% of Meijer's adult antibiotic generic prescriptions.

Murray would not reveal the financial details of the program, but "this will cost us some money and we are prepared to absorb that," he said.

Meijer began testing this program in certain areas over "the past few years," Murray said. However, "I can't say the timing [of the launch] is unrelated to recent moves," he added, referring to Wal-Mart's rollout.

"Pharmacy is quite important to us," Murray told SN. "Often pharmacy is where people get introduced to Meijer and we're confident that once people are introduced we can get them doing grocery [shopping] as well as pharmacy."

However, Meijer does expect its pharmacy, grocery and general merchandise departments to "each hold their own," Murray said. "So even though they are all in the same box, the cost is something we really thought of just in terms of pharmacy."

H-E-B has implemented a free "My H-E-B Pharmacy Rewards" card, which will offer 500 generic drugs for $5, plus savings on all other brand and generic drugs.

The program also will include special offers throughout the store as well as priority scheduling for H-E-B Pharmacy services and access to free health screenings and education. Cardholders will also receive a free copy of H-E-B's healthy living magazine - "H-E-B goodness!" - according to a statement. H-E-B did not respond to calls from SN.

Wegmans' new program focuses on maintenance drugs, or prescriptions taken for chronic conditions over long periods of time, the company said. Customers can purchase a 90-day supply of nearly 200 of these generic drugs for $11.99, which is a less expensive offer than Kmart's.

"This is a great starting point, but it's likely the list will evolve over time with possibly more drugs or dosages added," said John Carlo, Wegmans' director of managed care, in a statement. "In addition, a 90-day supply is more convenient for customers and more cost effective for us to fill." Wegmans declined comment for this story.

WENDY TOTH

'Disrupting the Market'

TEANECK, N.J. - Wal-Mart Stores' $4 generic prescription drug pricing is a strategy that could be used in other categories, said Lee Scott, chairman and chief executive officer of the Bentonville, Ark., company.

During the retailer's annual analysts conference last week, Scott described the program as "absolutely one of the coolest things we have done in a long time." It could serve as a template for future promotions in other product areas, Scott noted.

"It's a rational approach to disrupting the market and bringing benefit to ourselves," he said.

Responding to a question from an analyst, Scott acknow-ledged retailers that decided to be competitive and those who didn't. "Everybody is kind of driven by their own program," he said.

The generics pricing has given Wal-Mart "first-mover" status, he said. "It doesn't matter who follows. The recognition for this has gone to Wal-Mart in our customers' minds, and not unimportantly, to Wal-Mart in the minds of the politicians and people who we are trying to influence to allow us to continue to grow. Those people recognize that it is Wal-Mart that took a leadership position and have changed this [market] dramatically."

However, the program has its critics in the pharmacy industry. "Prescription medicines are not a commodity like T-shirts and DVDs," said Bruce Roberts, executive vice president and chief executive officer of the National Community Pharmacists Association, Alexandria, Va.

MARK HAMSTRA