Wal-Mart's shockingly cheap drug plan

The retailer partners with Humana to beat out other plans for Medicare recipients.

By Kim Peterson Oct 1, 2010 1:56PM

Medicare drug plan © MedicalRF.com/CorbisWal-Mart (WMT) upended the drug industry in 2006 by offering $4 generic drugs. Now the retailing giant is at it again, unveiling the cheapest prescription drug plan in the country.

Wal-Mart has partnered with health insurance company Humana (HUM) and will offer the plan to people on Medicare, Bloomberg reports. Starting Jan. 1, the plan will cost only $14.80 a month -- less than half the average Medicare premium for prescription drugs.

It's a win-win for both companies. Humana wants to boost its market share and hopes Wal-Mart will bring in enough business to keep its drug plans profitable. Wal-Mart wants more people to visit its pharmacies instead of Walgreens (WAG) or CVSCaremark (CVS).

 

The companies said the typical Medicare prescription-drug customer could save $450 a year with the new plan, which also has lower copayments and cost shares, according to Dow Jones Newswires. At specific pharmacies -- such as, oh, say, Wal-Mart's -- the copayment could be as low as $2 for generic drugs. Humana's mail-order service will have zero copay.

Already analysts predict a price war as other retailers and drugstores scramble to match Wal-Mart's pricing. "We would not be surprised if rival insurers form joint plans with other pharmacy chains," said Standard & Poor's analyst Phillip Seligman, according to Dow Jones.

People can enroll in the new plan from Nov. 15 through the end of the year. Click here for more information.

 

Post continues after video:

One Sanford Bernstein analyst estimates the new offering could add 250,000 people to Humana's Medicare drug plan, according to Bloomberg, bringing the total to nearly 2 million. Humana has already set a goal of a 5% operating margin (before taxes), and it thinks the Wal-Mart plan will help meet that target, Reuters reported.
Wal-Mart wouldn't say how many pharmacy customers it hopes to add.

About 18 million Medicare beneficiaries have signed up for prescription-drug-only plans, Reuters reported.
More from MSN Top Stocks:
50Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
279
279 rated 2
454
454 rated 3
606
606 rated 4
675
675 rated 5
690
690 rated 6
622
622 rated 7
453
453 rated 8
301
301 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.