Pharmacies make a lot of their money on huge mark-ups of generic drugs. Most consumers don't know or don't care about this little secret, since they only worry about their co-pays.
Wal-Mart changed all this when they started charging $4 for a number of generic drugs and then they expanded on that program last week.
According to the New York Times, "Still, two of the nation’s largest prescription drug retailers, Walgreens and CVS, have said the Wal-Mart promotions have not affected their businesses and they have not matched the discount prices."
Today, only a week later, Walgreens stock is down 15% and the reason for this is that the company announced disappointing third-quarter earnings.
What was the problem? Weaker margins on generic drugs.
Wal-Mart just started wreaking havoc in the drug market. Target and others followed. Nothing will be the same. Watch as the old stalwarts try to keep prices high, until they finally bite the dust.
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