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The rite way to sell generics, and backroom (or boardroom) deals

Posted Oct 28 2008 8:04am
You can tell that the $4 generic programs have had an impact whenever Rite Aid starts up a program. Of all the generic programs out there, I think Rite Aid has the right idea.

Their program is 8.99 for a 30 day supply, 15.99 for 90 days. While it is still more expensive than the Walmart and Target-type programs, they have it right. Rite Aid is not giving away the product without recovering at least a half-way decent professional fee.

* * * * *
When Walmart and the me-too chains rolled out the $4 programs, I initially thought that it was for one of two reasons:
  1. force their competition out of business or
  2. drive down same-store sales to reduce the bonuses paid out to pharmacists, as well as drive down pharmacist salaries

But yesterday something hit me. I may be way off base, but then again I may be on the money.

This may be a little bit conspiracy-theory driven, so bear with me.

What are the chances that there have been some backroom deals between some of the executives in the insurance and pharmacy companies? Things that would benefit the corporations individually. But benefit the executives even more.

What I'm postulating is this: I think that there has been some agreements where the insurance company CEOs have shared some inside information with the pharmacy CEOs that has allowed to pharmacy people to profit. I don't know if it would be information about preferred products or what, but just something to give a little advantage, investment-wise.

In exchange, the pharmacy CEOs have implemented the $4 programs to help the insurance guys show a better profit margin. Better margin = bigger bonuses for the insurance CEOs. Because we all know that the insurance companies aren't going to decrease premiums if their expenses are down. It's all profit and bonus-driven.

Waddaya think?

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