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Wal-Mart Expanding Prescription Drug Program

The excursion of Wal-Mart (NYSE:WMT) into the medical field, specifically with their prescription drug program, is a great lesson in how the market is far more effective in finding solutions to high cost in health care than the government.

What's great about the Wal-Mart strategy is it has not only saved consumers about $1.2 billion in health care costs, but it is being done while generating a profit. The existing $4 generic prescription drug program is available at over 4,000 Wal-Mart, Sam's Club and Neighborhood Market pharmacies.

The retail giant now has plans to expand their prescription drug program by adding 90-day prescription drugs for $10. They are also increasing medications for women, while introducing $4 medicines able to be bought over-the-counter.

There will be a huge number of over-the-counter medications made available (over 1,000 in number), consumers will be able to buy for $4 or under. The expanded prescriptions for up to 90 days will include up to 350 generic drugs which will cost only $10.

Wal-Mart added that some of the new prescriptions offered for women will be to treat ailments like breast cancer, hormone deficiency, osteoporosis and menopause. For up to a 30-day supply it will cost $9.

In the short time Wal-Mart has launched their program, their health and wellness business has grown to be 9 percent of their business. They started the program in September 2006.

"It's accretive and continues to be very positive for us," said Bill Simon, executive vice president and chief operating officer of Wal-Mart Stores U.S. "Total overall growth has been very strong. As our prescription volume goes up, we are able to buy better. The business results have exceeded our expectations. We expect that to be the case as well with the new introductions."

Wal-Mart has employed their usual strategy of turning over product, with less profit margin, as their business model of choice for their health and wellness unit.

Of course you can't measure the success based on profit margins alone, as the traffic generated by the program is a significant factor in the overall strategy.

The company added that it's looking at branded drugs and ways to lower prices there as well.

With plans for Wal-Mart to open about 400 in-store health clinics by 2010, it's exciting to see market solutions being developed by business in the area of health. I'm looking forward to see how this develops over the next few years.

This is a major reason we need to forget about big government and throwing tax dollars at health costs. The market will figure out ways to handle the cost of health care, and Wal-Mart is helping lead the way in finding solutions.