One of the nation's largest drugstore chains ratcheted up a price war Thursday, offering deep discounts on generic prescriptions amid national concern about the spiraling cost of healthcare.
Drugstore giant CVS Caremark Corp. announced it would sell 90-day supplies of more than 400 medications for $9.99 and offer discounts for cash-paying patients at its in-store medical clinics.
The price war was unleashed by Wal-Mart Stores Inc., the country's largest retailer, a few years ago. Since then, many grocery stores have followed suit.
The price competition makes generic drugs just about the only healthcare bill that isn't escalating. The lower prices provide a measure of relief to consumers who are struggling with rising health insurance premiums and other out-of-pocket expenses or have lost coverage altogether.
Now savvy shoppers can buy many prescriptions for less than laundry detergent, face cream or a pound of deli meat.
Retailers can't make much, if any, profit off the cut-rate generics. But that doesn't mean they won't make money off the customers. The stores are using generic prescriptions as loss leaders to bring people in. And cheap drugs do drive other purchases.
"They are pulling us into the store," said Stephanie Nelson, an Atlanta resident who shares shopping tips on her website Couponmom.com.
"As soon as you go to the back of the CVS to pick up your prescription or wait for it to be filled, what are you going to do? You are going to shop," she said. "I'll get my diet Coke, shampoo, whatever I need. I'm not going to a different store."
Nearly every pharmacy -- from the small corner drugstore to the industry giants -- has been affected by the price war in much the same way that sales of everything from T-shirts to CDs have been transformed by Wal-Mart's low-price model.
Gone are the easy-money days when drugstores could sell a month's supply of a generic prescription for $8 and pocket the markup of 50% or more.
"Generics used to generate a significant amount of profit, and that's all been changed by Wal-Mart," said Joel W. Hay, an associate professor of pharmaceutical economics at USC. "That's really squeezed the rest of the retail pharmacy industry. And now they are getting the price down to where there is no profit left, or very little."
Still, competition for the prescription traffic is fierce. Millions of aging Americans are being treated for high blood pressure or cholesterol, allergies and other chronic conditions that send them in for refills.
