March 2009




Generic drug plans shake up the pharmacy market

by Vanessa Caceres EyeWorld Contributing Editor



Patient demand changes with some ophthalmologists’ prescribing habits

Low-cost generic drug plans offered by supermarkets and mass merchandisers are changing your patients’ medication usage. Wal-Mart started the trend in Florida in 2006 when it began to offer a 30-day supply of certain generic medications for $4 (the current tally is approximately 350 generics; see the list at fusion/four_dollar_drug_list.pdf ) and $10 for a 90-day supply. Interest in the program spurred Wal-Mart executives to roll it out in its stores in 49 states. Other supermarkets and mass merchandisers have followed suit, including Bloom, Giant Food, Safeway, and Target. Some supermarkets use similar plans; for example, the grocery store Publix offers a free 14-day supply on eight different antibiotics.

Fast forward to 2008. A Wal-Mart press release says that the company’s program has saved consumers $1 billion and counting as of April 2008, chain pharmacies that initially avoided the low-cost plans are now starting to offer them, and the generic drug market is growing at a rapid pace—a 7% growth, which is faster than the overall world pharmaceutical market, according to the Generic Pharmaceutical Association.

Why has the $4 plan shaken up the pharmacy market, and how is it affecting ophthalmologists and their patients?


The $4 plans and similar ones appeal to cash-strapped patients who are grappling with today’s tough economy, said Alan L. Robin, M.D., associate professor of ophthalmology and associate professor of international health, Bloomberg School of Public Health, Johns Hopkins University, Baltimore. “If you have a choice, would you pay $25 or $4?” he said.

Although many patients have third-party insurance with copayments that hover around $10 to $30, these plans help the uninsured, the under-insured, and the average patient who may be taking multiple medications, Dr. Robin said. A letter to the editor published in 2005 in Ophthalmology and co-authored by Dr. Robin reported that of 263 glaucoma subjects, 75% were also using nonglaucoma systemic medications. Twenty five percent of the 263 subjects required more than four medications a day. Those numbers do not include over-the-counter therapies.

“Even minimal copayments can add up to a significant dollar amount for the patient with limited income,” Dr. Robin said. Healthy patients often require more than one prescription medicine a day for problems such as high blood pressure or cholesterol, he said.

The plans also appeal to patients who must contend with Medicare’s Part D “donut hole,” said pharmacy economics expert Adam J. Fein, M.D., Pembroke Consulting, Philadelphia. Part D, which began in January 2006, helps Medicare patients with medication expenses. After Part D pays for up to $2,510 of a Medicare patient’s prescriptions, patients must pay out-of-pocket for their medicines until the total reaches $4,050. “If you’re a senior, you want to keep costs below that limit,” Dr. Fein said. “When Part D started, generic dispensing increased almost inadvertently.” Mass marketers increasingly offer the low-cost generic drug plans because they lure customers into their stores, Dr. Fein said. So instead of patients thinking of chain pharmacies such as CVS, Walgreens, or Rite-Aid, or independent pharmacies to fill a prescription, they stop by their local supermarket—and most likely buy a few other items while they are there.

“Consumers will view Wal-Mart and other stores as places to get prescription drugs,” Dr. Fein said. Although stores are generally skittish about revealing exact growth numbers, Dr. Fein estimates that the low-cost plans have helped boost volume by 15% to 20% at a typical Wal-Mart pharmacy.

Even with the $4 retail price for the drugs, the stores still make money from increased traffic and the negotiation of lower drug costs with suppliers.

“Many of the drugs can be bought for literally pennies a pill. The stores aren’t losing money on average with these programs,” Dr. Fein said.

Additionally, the programs boost revenue because of the large gross profit margins made from generic drugs compared with brand-name drugs, Dr. Fein said. From an estimated $274 billion in 2007 drug sales, $221 billion was from branded drugs and $53 billion from generic drugs, Dr. Fein said. However, only 12% of the brand-name drug sales were gross profit for stores and pharmacies. In contrast, 60% of the $53 billion figure was gross profit for them, he said.

Chain pharmacies still claim a large customer base thanks to their convenience and the fact that many customers with insurance are comfortable with their copayment amount. However, in June, Walgreens announced a 90-day supply plan for $12 for 400 generic drugs. The plan also requires a $20 to $35 annual fee.

Independent pharmacies have been hurt by the low-cost drug plans and by other factors in the market, Dr. Fein said. “Their numbers have dropped by half in the last 15 to 20 years,” he said.

Clinical implications

Although many agree that the low-cost drug plans can be a great tool to help patients pay for drugs, physicians also must consider drug quality.

Certain generic drugs may require more frequent dosing than their more modern and branded counterparts. So purchasing of the drugs may increase although compliance may not.

The current Wal-Mart list includes the following ophthalmic drugs (some drugs appear on Wal-Mart’s list more than once but in different potency levels): atropine sulfate, bacitracin, erythromycin, gentamicin, levobunolol, neomycin/polymyxin/dexamethasone, pilocarpine, polymyxin sulfate/TMP, sulfacet sodium, timolol maleate, and tobramycin.

“You’re not going to get the most state-of-the-art drug for $4,” said Steve Kymes, Ph.D., M.H.A., research assistant professor, department of ophthalmology and visual sciences, Washington University, St. Louis, Mo. “You won’t find a prostaglandin analog for $4.”

Even though prostaglandins may be the “gold standard” for glaucoma patients, Dr. Robin wonders if patients’ increasing economic concerns are leading more ophthalmologists to prescribe generic beta blockers such as timolol, which appears on many low-cost generic drug lists.

“Prostaglandin analogs are still first-line therapy for glaucoma for me because of their good efficacy and side-effect profile, but often the price difference between this and generic timolol makes the generally well-tolerated beta blocker a good choice for many patients,” said Mitchell V. Gossman, M.D., St. Cloud, Minn.

“For patients on timolol, I often mention [the plans] to them,” said Marjorie Warden, M.D., Baltimore. “There are few people these days not feeling the pinch of the escalating cost of living … Anything that can improve the likelihood of compliance is a good thing.”

“I have some patients who have no prescription plan, and I prescribe beta blockers instead of prostaglandins for these patients. I also have patients who are on multiple medications for multiple medical problems, and they ask me for generic prescriptions to reduce their overall prescription costs,” said Dawnielle Kerner, M.D., Norfolk, Va.

Other ophthalmologists said they have found a number of uses for drugs available through the low-cost plans.

“I recommend $4 generics more and more, particularly generic maxitrol for chalazion, as long as the patient is not allergic to neomycin,” said Judith Schartenberg, M.D., Fraser, Mich.

“An important drug to cornea subspecialists is generic acyclovir at Wal-Mart for $4 a month. Many of my patients go to these stores because the generic price is much lower than patients’ insurance co-pay,” said Brad E. Oren, M.D., Lake Worth, Fla. “I use erythromycin ophthalmic ointment often, but now I use it and recommend patients take it to Wal-Mart, Target, or Cash-Wise [a local chain],” Dr. Gossman said.

However, ophthalmologists are not using the low-cost plans haphazardly. In fact, some say there hasn’t been a big interest in them yet.

“I don’t have a lot of patients who are telling me about the Wal-Mart prescription plan, but I would support their efforts to get the most affordable plan possible,” said Leon W. Herndon, M.D., associate professor of ophthalmology, Duke Eye Center, Durham, N.C.

“I try to be cost conscientious for my patients and use the plans as much as possible. However, when I need a fourth-generation fluoroquinolone for surgery or a bad infection and when I need a prostaglandin for glaucoma, I don’t use the plans,” said D. Brian Kim, M.D., Dalton, Ga.

“There are some cheap medications in the program that I virtually never use, such as tobramycin and pilocarpine,” Dr. Gossman said.

A long-term look

From a clinical perspective, the success of the low-cost generic drug plans may be measured by increased patient compliance in maintaining their medication regimen. For example, patients may fill all necessary prescriptions because they can afford to do so, although it is not yet clear if that means they actually will follow dosing recommendations.

“There’s a question of whether or not because patients have greater ownership [with these plans], there is greater compliance,” Dr. Kymes said.

Overall, the low-cost plans will hopefully benefit patients, he said.

“We don’t want people to not take their medication because they can’t afford it,” he said.

Editors’ note: The physicians interviewed have no financial interests related to their comments.

Contact information

Fein: 215-523-5700,
Herndon: 919-684-6622,
Kim: 706-226-2020,
Kymes: 314-747-4612,
Oren: 561-433-0098,
Robin: 410-377-2422,
Schartenberg: 586-297-7250,
Warden: 410-480-9966,

Generic drug plans shake up the pharmacy market Generic drug plans shake up the pharmacy market
Ophthalmology News - EyeWorld Magazine
283 110
283 110
True, 3