Walmart’s Loss Leaders: First Beyonce, Now Prozac (fluoxetine hydrochloride)

In the new year, Walmart now offers a $4 prescription price on more than 300 generic drugs in all Walmart controlled pharmacies in 49 U.S. states. As we saw in the previous posts Walmart’s Tough Choices and  Walmart Medical Clinics, disruption is bound to happen as 21st Century business comes to grips with the 20th Century way we have of handling healthcare.

The pricing power of Walmart and its willingness to discount deeply to get customers into the store has already transformed the music industry. The list price on Beyonce’s second solo album B’day is $18.98, but you can get it at Walmart for $11.98. (You can alternately download the album’s three good tunes — including the currently hot $3.49 single Irreplaceable — for just 88 cents apiece.) Now they’re selling the generic form of Prozac for just $4 for a month’s supply versus the $33 average  branded price.

In the study Market power in music retailing: the case of Wal-Mart published in the academic journal Popular Music and Society, Mark A. Fox analyzes how Walmart’s discounting changed the record business by highlighting only sure-fire bestsellers. More ominously, he describes the content decisions Walmart forces on artists: no cover art or lyrics that are too sexy, no songs denigrating Walmart, and no albums with Parental Advisory stickers.

Walmart’s ability to drive down the cost of genercic drugs is a good thing. But in the pharmaceutical context, questions arise: "How does Walmart decide which generics to offer at low cost?" I didn’t see
a Contraceptive category, for example, although in the Hormones category
medroxyprogesterone AC is listed in 2.5, 5 and 10 mg dosages. "What influence does commerce have on medicine?" There are lots of cardiac and diabetes offerings, but only one generic cancer drug and two Parkinsons generics. Chronic patients with repeat business seem to get a better break than short-timers who get cured or die. "How will Walmarts’ near-inevitable monopsony power —  its control over suppliers — influence pharma companies’ choices in drug discovery, packaging and dosage. " Walmart prefers Splenda, so Coca-Cola had to change its new product to use Splenda. When it comes to medicine the potential for nutty conspiracy theorists is astounding.