Kroger Joins Discount Prescription Expansion

DAN ALAIMO

CINCINNATI — Expansion of generic prescription pricing programs is off to a fast start this year.

Kroger Co. here this month added pharmacies in four states — Indiana, Tennessee, Michigan and Texas — to its $4 generic drug program. Following a test here and in Columbus, Ohio, the retailer last October extended the offering to other Ohio pharmacies, in addition to Illinois, Kentucky, New Mexico, Nebraska, Indiana, Florida, Georgia, Kansas, Nevada and Utah.

Kroger's program, which offers 30-day supplies of over 300 generic drugs for $4, is now the second-largest in the nation, following Wal-Mart Stores, Bentonville, Ark., according to industry observers. Wal-Mart pioneered the concept in 2006 and expanded it nationally last year.

Kroger did not respond to requests for comment on the program and whether it is now national. Spokesman Gary Huddleston was quoted in a media report as saying, “Certainly we're sacrificing some markup to provide value to the customer. Hopefully we can win their business inside the store as well.”

Target, Minneapolis, and many supermarket chains, including Giant Eagle, Pittsburgh, Meijer, Grand Rapids, Mich., and Publix Super Markets, Lakeland, Fla., now have either comparable programs, or ones offering free antibiotics. SN recently learned that Publix, as well as other retailers, honor prescriptions written by veterinarians for pets under the programs.

Earlier this year, two Midwest retailers added discount drug promotions: Hy-Vee, West Des Moines, Iowa, and Martin's Super Markets, South Bend, Ind. Hy-Vee dispenses 30-day supplies of 400 drugs for $4, while Martin's offers 21-day supplies of eight generic antibiotics.

“The landscape of medicine in regard to drug therapy is changing,” commented Bob Egeland, assistant vice president, pharmacy, Hy-Vee. “Pharmacists are exceptionally trained to help customers understand generic drugs.”

At Martin's, Dave Adams, director of pharmacy, told SN: “After evaluating several programs, we felt the free antibiotic program would not only be the most beneficial program to our customers, but would also specifically target the much desired younger demographic. The antibiotics included on our list account for nearly half of the generic pediatric prescriptions dispensed at our pharmacies.”

Addressing a question about the cost of the program, Adams said, “We feel the growth in business above and beyond the free antibiotics will help offset the cost incurred by the program.

“Martin's is committed to this program indefinitely and sees the list of covered antibiotics expanding over time. Prescription promotional programs such as ours represent a change in pharmacy marketing. In the past, service and convenience were the primary driving force behind selecting a pharmacy; now price and value play an increasing role.”

Commenting on the rapidly growing movement to generic prescription promotional pricing, Bruce Kneeland, president of Pharmacy Connections, a consultancy in Royersford, Pa., said, “this is one of those things that is going to happen whether it is a good or bad idea. Competitive pressure will require people to continue to jump on this bandwagon. The unfortunate part is that it devalues the clinical value of a pharmacy and a pharmacist.”

The programs offered by Wal-Mart, Giant Eagle and others “have affected Kroger's business,” said Jim Wilson, president, Wilson Health Information, New Hope, Pa. “They want to maintain the share of customers that they have, and they have found that people will shop around on prices if they are paying out of pocket for their prescriptions.”

According to Wilson's “2007 Pharmacy Satisfaction Digest,” 23.4% of consumers surveyed said their pharmacies offered a $4 or less program, and 25% of those said they have used the program in the last year. Less than 5% said they have used programs offering free antibiotics, Wilson said.

“Kroger is a major market player. Taking this action is a recognition that the market is changing.”