# How does WalMart manage those $4 prescriptions? **URL:** \ **Category:** Factual Questions\ **Created:** [August 11, 2009, 5:31am UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034 "2009-08-11T05:31:06Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![SCSimmons](https://avatars.discourse-cdn.com/v4/letter/s/e495f1/32.png) [@SCSimmons](https://boards.straightdope.com/u/SCSimmons)\ **Post date:** [August 11, 2009, 3:31pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/21 "2009-08-11T15:31:12Z")
> [@IAmNotSpartacus](#): > > This seems more believable. WalMart is not in the charity business (advertisements and tax writeoffs guised as corporation donations notwithstanding). If they can’t make some coin selling something, I have a very hard time believing they’d sell it. I am positive that both Wal-Mart EVP Bill Simon (quoted above) and our own **chaoticbear** are accurately reporting that the selling price of those medicines is higher than the wholesale cost of the drugs alone. But I am equally positive that, if Wal-Mart’s only business was selling those generics at $4 a pop, they’d go bankrupt faster than M.C. Hammer. That price is below the profit point even for the cheapest medications, and even with Wal-Mart’s economies of scale; they make net profit from this offer only because it drives increased profits to many other parts of their business. That works because there are so many other opportunities in a business that size; if this was an effective strategy in general, more companies would be doing it. And they’re not–there are a few similar promotions, but nobody is offering as low a price on as many medicines as Wal-Mart, because nobody else has the overall business model to support it. You’re certainly right that they wouldn’t be selling at this price if it didn’t hit their bottom line on the plus side. But that doesn’t mean that the individual transactions aren’t being made at a loss. Nobody can say for certain, of course, as those numbers are all proprietary; but given the necessary costs of doing business, I have no doubt that most if not all of these sales are not profitable in themselves for Wal-Mart. The profit comes from the increased sales on other medications and in other departments of the store driven by the increased traffic. ---
**Author:** ![ivylass](https://avatars.discourse-cdn.com/v4/letter/i/9de053/32.png) [@ivylass](https://boards.straightdope.com/u/ivylass)\ **Post date:** [August 11, 2009, 4:24pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/22 "2009-08-11T16:24:05Z")
> [@Bijou\_Drains](#): > > Marketing for a drug costs more than R&D but drug companies don’t like to admit that. All that free stuff for doctors adds up fast. They don’t do that anymore…give free tchotkes to doctors. I was getting chemo last year and got a goodie bag at my doctor’s from Aventis, (I think) and the nurse said new regulations were in place that starting this year, pharm companies couldn’t give away promotional items to doctors any more. Me, I’d like to think doctors are more concerned with which drug works best for their patient, not whether or not GSK gave them a free pen and coffee mug. Do doctors really base their prescription decisions on the latest freebie from the sexy young pharmaceutical rep? ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [August 11, 2009, 4:31pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/23 "2009-08-11T16:31:38Z")
I use Walgreens for my prescriptions and one of my generics (my thyroid medication) is actually LESS than $4/mo. Without looking it up , I think it’s about $3.45 – just over a dime per pill. Even the brand name drug is about 20 cents per pill. So yeah, there are prescription drugs out there that really are cheap. I’m doing a happy dance because all my prescriptions are available as generics. ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [August 11, 2009, 4:36pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/24 "2009-08-11T16:36:27Z")
> [@ivylass](#): > > They don’t do that anymore…give free tchotkes to doctors. I was getting chemo last year and got a goodie bag at my doctor’s from Aventis, (I think) and the nurse said new regulations were in place that starting this year, pharm companies couldn’t give away promotional items to doctors any more. The pens and coffee mugs and such are a thing of the past, yes. But the tropical island conferences are not. Some of the big items are gone, and there are new restrictions on others. For example, sales reps won’t take a doctor out to a steak lunch anymore. But they can still bring them lunch in the office if it’s not too expensive. > [@](#): > > Do doctors really base their prescription decisions on the latest freebie from the sexy young pharmaceutical rep? Not intentionally, but I believe studies have shown that it works psychologically. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [August 11, 2009, 4:45pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/25 "2009-08-11T16:45:00Z")
> [@SCSimmons](#): > > I am positive that both Wal-Mart EVP Bill Simon (quoted above) and our own **chaoticbear** are accurately reporting that the selling price of those medicines is higher than the wholesale cost of the drugs alone. But I am equally positive that, if Wal-Mart’s only business was selling those generics at $4 a pop, they’d go bankrupt faster than M.C. Hammer. That price is below the profit point even for the cheapest medications, I disagree. I use to buy 100 count generic Sudafed for $1. **IF** the R&D is fully amortized and **IF** the manufacturing process is cheap then some drugs can be manufactured for almost nothing. Think about it. They’re chemicals. Consider all the household cleaners and whatnot that you buy in quart containers compared to a tiny tiny pill that weighs nothing. You’re literally paying for the packaging in some cases. Now the medicines that are made from the spleen of an albino Peruvian mosquito probably cost more to manufacture. Wal Mart isn’t selling those for $4. ---
**Author:** ![Green\_Bean](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/green_bean/32/1760_2.png) [@Green\_Bean](https://boards.straightdope.com/u/Green_Bean)\ **Post date:** [August 11, 2009, 4:45pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/26 "2009-08-11T16:45:20Z")
> [@ivylass](#): > > Do doctors really base their prescription decisions on the latest freebie from the sexy young pharmaceutical rep? They don’t mean to. But if they’re sitting there with a pen and a tissue box and a desk set and a clipboard that has “Mycoxaflopin” emblazoned on it, it’s more likely that they’re going to think of prescribing that before they think of prescribing Viagra. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [August 11, 2009, 4:55pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/27 "2009-08-11T16:55:12Z")
> [@Magiver](#): > > I disagree. I use to buy 100 count generic Sudafed for $1. **IF** the R&D is fully amortized and **IF** the manufacturing process is cheap then some drugs can be manufactured for almost nothing. Think about it. They’re chemicals. Consider all the household cleaners and whatnot that you buy in quart containers compared to a tiny tiny pill that weighs nothing. You’re literally paying for the packaging in some cases. > > Now the medicines that are made from the spleen of an albino Peruvian mosquito probably cost more to manufacture. Wal Mart isn’t selling those for $4. I agree. Even with technological advances in supply chain and lean manufacturing combined with wholesale discounts, those costs are almost unlikely to affect the product ship and is more likely to be distributed over the cost of monthly ship an entire area/zone/whathaveyou. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [August 11, 2009, 6:22pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/28 "2009-08-11T18:22:42Z")
> [@SCSimmons](#): > > You’re certainly right that they wouldn’t be selling at this price if it didn’t hit their bottom line on the plus side. But that doesn’t mean that the individual transactions aren’t being made at a loss. What does this mean? First you are saying they are making a profit, then you say the individual transactions that led to that profit are occurring at a loss? I don’t quite understand how to resolve this. ---
**Author:** ![dogbutler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dogbutler/32/428_2.png) [@dogbutler](https://boards.straightdope.com/u/dogbutler)\ **Post date:** [August 11, 2009, 7:09pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/29 "2009-08-11T19:09:39Z")
> [@IAmNotSpartacus](#): > > What does this mean? First you are saying they are making a profit, then you say the individual transactions that led to that profit are occurring at a loss? I don’t quite understand how to resolve this. Customer buys a $4 generic prescription, Wal-Mart loses 75 cent on the transaction. While waiting, customer buys $80 of stuff that cost Wal-Mart $65. $15-.75=$14.25 profit for the day. If the customer went to CVS, Wal-Mart’s profit would be zero. ---
**Author:** ![Satchmo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/satchmo/32/4223_2.png) [@Satchmo](https://boards.straightdope.com/u/Satchmo)\ **Post date:** [August 11, 2009, 7:28pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/30 "2009-08-11T19:28:08Z")
> [@dogbutler](#): > > Customer buys a $4 generic prescription, Wal-Mart loses 75 cent on the transaction. > While waiting, customer buys $80 of stuff that cost Wal-Mart $65. > > $15-.75=$14.25 profit for the day. If the customer went to CVS, Wal-Mart’s profit would be zero. [QUOTE=TheJerk] Navin R. Johnson: [bleakly] I’ve already given away eight pencils, two hoola dolls, and an ashtray, and I’ve only taken in fifteen dollars. Frosty: Navin, you have taken in fifteen dollars and given away fifty cents worth of crap, which gives us a net profit of fourteen dollars and fifty cents. Navin R. Johnson: Ah… It’s a profit deal. Takes the pressure off. Get your weight guessed right here! Only a buck! Actual live weight guessing! Take a chance and win some crap! [/QUOTE] One of my favorite movies. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 11, 2009, 7:50pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/31 "2009-08-11T19:50:18Z")
> [@dropzone](#): > > It’s apparent that Target knows that most of its prescription customers will spend extra time in the store. I hope for them that most of those people are feeding quarters into the video games, but (DON’T tell them this!) them customers hoping for a $.25 spiff will burn it first thing tomorrow, leaving OT Players like me sitting on what our insane CEOs are sitting on the penny slots at Atlantic City. Smack! Get a hold of yourself, man. What in God’s name are you talking about? ---
**Author:** ![jayjay](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jayjay/32/6765_2.png) [@jayjay](https://boards.straightdope.com/u/jayjay)\ **Post date:** [August 11, 2009, 7:58pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/32 "2009-08-11T19:58:56Z")
> [@Green\_Bean](#): > > “Mycoxaflopin” It took me a shamefully long time (at least 30 seconds!) to get this. I was trying to break it down into what it WOULD mean if it were real and wondering why a doctor would prescribe an antifungal for erectile dysfunction… ---
**Author:** ![HorseloverFat](https://avatars.discourse-cdn.com/v4/letter/h/8e8cbc/32.png) [@HorseloverFat](https://boards.straightdope.com/u/HorseloverFat)\ **Post date:** [August 11, 2009, 8:05pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/33 "2009-08-11T20:05:59Z")
> [@](#): > > of course they have other prescriptions! Right. I imagine this is the bigger motivator than people doing their shopping in the store. I rarely do this kind of impulse shopping but I will get, say, $5 dollar antibiotics and $98 wart cream. I think its fair to say that the mark up on the wart cream is substantial and Walmart would rather get that than the small pharmacy next door that charges 12 dollars for antiobiotics. This is typical loss leader behavior, not altruism or some healthcare revolution. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 11, 2009, 8:16pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/34 "2009-08-11T20:16:53Z")
> [@HorseloverFat](#): > > Right. I imagine this is the bigger motivator than people doing their shopping in the store. I rarely do this kind of impulse shopping but I will get, say, $5 dollar antibiotics and $98 wart cream. I think its fair to say that the mark up on the wart cream is substantial and Walmart would rather get that than the small pharmacy next door that charges 12 dollars for antiobiotics. > > This is typical loss leader behavior, not altruism or some healthcare revolution. So Wal-Mart is using these $4 scripts as a loss leader to get you in the door and sucker you into buying their other high-priced, rip off merchandise? The Louis Vatton bags perhaps? ---
**Author:** ![kidchameleon](https://avatars.discourse-cdn.com/v4/letter/k/898d66/32.png) [@kidchameleon](https://boards.straightdope.com/u/kidchameleon)\ **Post date:** [August 11, 2009, 8:18pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/35 "2009-08-11T20:18:27Z")
> [@Marley23](#): > > The pens and coffee mugs and such are a thing of the past, yes. But the tropical island conferences are not. Some of the big items are gone, and there are new restrictions on others. For example, sales reps won’t take a doctor out to a steak lunch anymore. But they can still bring them lunch in the office if it’s not too expensive. And only then if you’re offering some sort of educational benefit. ---
**Author:** ![HorseloverFat](https://avatars.discourse-cdn.com/v4/letter/h/8e8cbc/32.png) [@HorseloverFat](https://boards.straightdope.com/u/HorseloverFat)\ **Post date:** [August 11, 2009, 8:24pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/36 "2009-08-11T20:24:24Z")
> [@](#): > > So Wal-Mart is using these $4 scripts as a loss leader to get you in the door and sucker you into buying their other high-priced, rip off merchandise? The Louis Vatton bags perhaps? Did you even bother reading my post? The last time I bought prescription skin creme it cost me $120. You bet your ass that’s a tidy profit. Not exactly high fashion, but still real money. I cant remember the last time I just had one prescription to fill. Walmart draws people in with “Hey we have 4 dollar pills” but only for select off-patent generics. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 11, 2009, 10:22pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/37 "2009-08-11T22:22:19Z")
> [@HorseloverFat](#): > > Did you even bother reading my post? The last time I bought prescription skin creme it cost me $120. You bet your ass that’s a tidy profit. Not exactly high fashion, but still real money. I cant remember the last time I just had one prescription to fill. Walmart draws people in with “Hey we have 4 dollar pills” but only for select off-patent generics. I did, but I thought you were being facetious. For me, Wal-Mart has been the lowest priced of any prescription medication of any local drug store, with the possible exception of Costco by a few bucks here and there. I remember the last time I was without prescription med coverage. It cost me $60 per month at the local pharmacy. Then Wal-Mart started its $4 program and the med was now $7 at the same pharmacy. Generic the whole time at both stores. I never bothered to price it at Wal-Mart before. $60 to $7…who was screwing the American consumer in my situation? Big bad Wal-Mart, or the friendly local drug store? ---
**Author:** ![SCSimmons](https://avatars.discourse-cdn.com/v4/letter/s/e495f1/32.png) [@SCSimmons](https://boards.straightdope.com/u/SCSimmons)\ **Post date:** [August 11, 2009, 10:33pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/38 "2009-08-11T22:33:54Z")
> [@HorseloverFat](#): > > Right. I imagine this is the bigger motivator than people doing their shopping in the store. I rarely do this kind of impulse shopping but I will get, say, $5 dollar antibiotics and $98 wart cream. I think its fair to say that the mark up on the wart cream is substantial and Walmart would rather get that than the small pharmacy next door that charges 12 dollars for antiobiotics. > > This is typical loss leader behavior, not altruism or some healthcare revolution. If it were just prescriptions, then other drugstores would be able to more closely match this price point. I think it really is the whole store–prescriptions, dry goods, electronics, groceries, auto parts, etc. It’s part of a general strategy to make Wal-Mart your one-stop shop for everything you need in your entire life. That sheer variety of goods and services under one roof is one of their biggest differences from their competitors … [conspiracy theory]Then, once they drive everybody else out of business, they can raise their prices to whatever they want, and _we’ll all just have to pay them_.[/conspiracy theory] 😉 ---
**Author:** ![HorseloverFat](https://avatars.discourse-cdn.com/v4/letter/h/8e8cbc/32.png) [@HorseloverFat](https://boards.straightdope.com/u/HorseloverFat)\ **Post date:** [August 11, 2009, 10:34pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/39 "2009-08-11T22:34:22Z")
The idea is to sell at a loss to drive out the competition so you can go back and raise your prices. I am not arguing about “who is screwing the American consumber” but pointing out that this is retailing 101, not some handout from Walmart. If anything, it helps Walmart’s bottom line because people like me walk in with a script for 3 things, and only 1 has a generic. ---
**Author:** ![ladyfoxfyre](https://avatars.discourse-cdn.com/v4/letter/l/ad7895/32.png) [@ladyfoxfyre](https://boards.straightdope.com/u/ladyfoxfyre)\ **Post date:** [August 11, 2009, 10:35pm UTC](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034/40 "2009-08-11T22:35:45Z")
> [@jtgain](#): > > I did, but I thought you were being facetious. For me, Wal-Mart has been the lowest priced of any prescription medication of any local drug store, with the possible exception of Costco by a few bucks here and there. > > I remember the last time I was without prescription med coverage. It cost me $60 per month at the local pharmacy. Then Wal-Mart started its $4 program and the med was now $7 at the same pharmacy. Generic the whole time at both stores. I never bothered to price it at Wal-Mart before. > > $60 to $7…who was screwing the American consumer in my situation? Big bad Wal-Mart, or the friendly local drug store? Find out what the cash price was before the $4 program, and you’ll see who it was. Wal-Mart can afford to buy in such enormous bulk that it’ll always be the lower price. But go price-check some Terbinafine #30 one time, it’s about $100 for a month supply if you get the real cash price, but Wal-Mart offers it on the $4 list, which means everybody else has to take a $96 loss on it to match Wal-Mart. Just because it’s generic, doesn’t mean it’s cheap. Pantoprazole (generic Protonix) has just come out, so it’s barely cheaper than the brand. Your friendly local drug store wasn’t screwing you, they just couldn’t afford to take the hit on the price like Wal-Mart can afford to. That’s been Wal-Mart’s business model since it began, why should pharmacy be any different? [Previous page](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034.md?page=1) [Next page](https://boards.straightdope.com/t/how-does-walmart-manage-those-4-prescriptions/506034.md?page=3)