Free (or low cost) generic drugs

My local pharmacist told me that they are now moving to free antibiotics.  I still haven’t figured out how I feel about this from a business perspective. 

From a patient perspective – great.  Less out of pocket (or so I hope).

From a business perspective, here are my questions:

  1. The reason to do this is to capture new market share.  Is it working?  Target gave away a $10 gift card if you brought a new prescription to them for a while.  I don’t think it is was a profitable deal for them, but I am not sure.
  2. In most cases (even WalMart), the discounted or free drugs are a minority of the total Rxs dispensed.  Assuming people are mindly happy with their current pharmacy, are they willing to move for one drug that saves them $4 or $8?
  3. For cash patients that move, are the other drugs they fill at the new pharmacy more expensive then their previous pharmacy?
  4. Has this strategy become a requirement at retail or is it still a differentiator?
  5. Why start doing this?  The right answer would be that you care about the patient.  I think the reality is the that pills cost almost nothing and your labor is a fixed cost so why not. 

Perhaps it makes sense.  It certainly gets a lot of marketing coverage.  It would be interesting to see the data at some point and see what market share moved, at what cost, and whether it was profitable marketshare. 

Your biggest risk as a pharmacy is opportunity cost.  As your staff becomes busier, do they have less time to counsel patients?  Does their error rate go up?

Trackbacks/Pingbacks

  1. Another CEO Interview - ABC « Patient Centric Healthcare - December 31, 2007

    […] was also an interesting discussion around Wal-Mart’s $4 generics.  I have been skeptical of the promotion, but he would have some visibility to data to understand the results.  Regardless, the effort of […]

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