Barbara Van Pelt smiled Thursday when she realized she would receive a $14 discount on one of her medicines. Web extra: View list of covered drugs

The 70-year-old Mechanicsburg resident, shopping at the Wal-Mart Supercenter on Dirksen Parkway, benefited from the retail giant’s decision to expand its $4 generic prescription program from Florida to 14 more states, including Illinois’ 157 Wal-Mart and Sam’s Club pharmacies.

“I think medicines are a rip-off to begin with,” said Van Pelt, a retired executive assistant with the Illinois treasurer’s office who shells out about $100 a month in insurance co-payments for her and her husband’s medicines. “This program ought to help a lot of people who need help.”

Wal-Mart officials in Illinois held news conferences in Springfield, Peoria and Chicago to roll out the program, which allows customers to pay $4 or less for 30-day prescriptions from a list of 317 generic drugs - from antibiotics and anti-depressants to heart medicine - that represent a quarter of the prescriptions Wal-Mart fills nationwide.

Wal-Mart officials said the program is designed to help cash-strapped customers, especially the 10 percent to 15 percent of its pharmacy customers without health insurance.

Co-pays that Wal-Mart’s insured customers in central and southern Illinois shell out for generic drugs average $10 to $15, said Jay Carroll, a Wal-Mart pharmacy district manager. That means most customers could see savings of 60 percent to 73 percent on co-pays if their drugs are on the list.

“We think that we’re going to be playing an important role in helping people save dollars and cents, and that translates to them hopefully being able to provide other things for their families,” said John Bisio, a Chicago-based Wal-Mart spokesman.

He said the company still plans to make a profit off of the sale of the reduced-price drugs. Wal-Mart didn’t design the program as a “loss-leader” - an arrangement in which a product is priced artificially low to get customers into a store so they will buy other items, he said.

Kevin Gardner, another Wal-Mart spokesman, said the company will be able to afford the discounts by cutting cost internally, not by demanding lower prices from Wal-Mart’s pharmaceutical suppliers.

Several of Wal-Mart’s competitors downplayed the potential impact of the cost-cutting measure, but Target announced that it will match Wal-Mart’s $4 price in states where Target competes with Wal-Mart. Those states include Illinois, Indiana, New Jersey, New York and Texas.

Bisio said the success of the program in Wal-Mart’s Florida stores in recent weeks convinced the nation’s largest retailer to roll out an expansion that originally was scheduled for 2007.

“It’s a result of Wal-Mart trying to be a leader in the industry, recognizing that health care is an issue that is on the minds of so many people,” he said. “It does translate to a savings and a qualify of life for our customers, and we think that would have a ripple effect for other retail and other prescription outlets.”

Deerfield-based Walgreen Co., the nation’s largest pharmacy chain, isn’t planning a specific price response to the Wal-Mart program and isn’t worried that Wal-Mart’s move will steal away Walgreen customers, spokesman Michael Polzin said.

Wal-Mart’s list of discounted drugs amounts to less than 5 percent of the generic drugs that Walgreen stores carry, he said. Ninety-five percent of Walgreen customers are insured, he said, and their average co-pay is $5 for the drugs on Wal-Mart’s list.

The price difference won’t be enough to drive many Walgreen customers away, Polzin said, adding that Walgreen stores are open longer hours and offer more services than Wal-Mart.

And Kmart issued a news release trumpeting a program it unveiled in May in which Kmart pharmacies charge $15 for a 90-day supply of certain generic drugs.

John Watt, a pharmacist and owner of Watt Bros Pharmacy, 830 North Grand Ave. E, said he doubts Wal-Mart’s program will take many customers away from independent pharmacies because of the narrow range of drugs discounted.

He said he offers customers services that Wal-Mart doesn’t, such as free delivery, and he can take more time counseling patients.

Still, Wal-Mart’s $4 deals will help many patients, according to Dr. Jennifer Western, a Springfield Clinic family physician who happened to be shopping at Wal-Mart Thursday.

The program also will save money for the state and private health plans, helping to hold down health-insurance costs, she said.

She scanned the list of $4 drugs and found some that normally would cost $30 to $40 for people with no drug coverage.

Western said patients also could save money by getting prescriptions from their doctors for some of the drugs on Wal-Mart’s list. The list included $4 prescription versions of over-the-counter drugs such as the anti-asthma drug Claritin and the antacid Zantac. The over-the-counter versions retail at Wal-Mart for $8 to $10 per package.

Critics of Wal-Mart say the company instead should focus its resources on improving health insurance benefits for its own workers, who must wait six months to a year to qualify for coverage and pay annual deductibles of $250 to $750 for individuals and up to $1,500 for families.

A report issued this month by the Illinois Department of Healthcare and Family Services showed that Illinois hospitals provided $2.5 million in uncompensated care and charity care to uninsured and under-insured Wal-Mart workers and their families from August 2005 through March 2006.

Those costs don’t include Wal-Mart workers covered by the state-federal Medicaid program.

The cost of the unpaid bills are shifted to other Illinoisans through insurance rates, said Tim Drea, legislative director of Rosemont-based Local 881 of the United Food and Commercial Workers International Union.

“We’re all paying,” said Drea, whose union represents about 400 Springfield-area employees of Schnuck, Kroger and IGA supermarkets.

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By DEAN OLSEN
STAFF WRITER

Dean Olsen can be reached at 788-1543 or dean.olsen@sj-r.com.

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