Dec. 2, 2006: The $4 generic drug plan at Wal-Mart Stores Inc. has arrived in California with dozens of drugs priced at $9. The world's largest retailer said Friday that 55 different drugs will be sold for $9 in California and eight other states to conform with "loss leader" statutes.

The drugs include a wide range of antibiotics, heart pills, diabetes drugs and anti-inflammatory medicines. The reason for the $9 price: The California code forbids anyone from selling something below cost "for the purpose of injuring competitors or destroying competition."

Wal-Mart doesn't believe it was charging below cost for the drugs in question, said spokesman Kevin Gardner. But California and other states, including Minnesota and Pennsylvania, calculate costs differently than Wal-Mart does, and the $4 price was deemed too low for those drugs, he said.
"We had to have a second-tier price," he said.

For simplicity's sake, Wal-Mart priced all 55 drugs at $9 high enough to steer clear of the law in those nine states but low enough so it "still saves customers money," Gardner said. Officials at Target Corp., which also has rolled out a $4 pricing plan to match Wal-Mart, couldn't be reached for comment.

Wal-Mart's $4 initiative was launched in Florida two months ago with great fanfare and has gradually expanded to the rest of Wal-Mart's territories. It reached California this week. The plan covers 331 different drugs. The prices are for 30-day supplies at typical dosages, the company says.

Analysts believe the program could boost business at Wal-Mart, whose sales have stagnated recently, while also triggering a substantial price war.

An out-of-pocket maximum is a cap on how much you have to pay for your individual or family’s covered medical expenses in a calendar year. After you reach the out-of-pocket maximum, the plan essentially pays 100% of all remaining covered expenses for that year.

Not all plans include counting the same requirements towards the maximum. Coinsurance is routinely included in the maximum out of pocket requirement, while co-payments and the Deductible are typically excluded. The out-of-pocket maximum is specified in the Carrier’s Summary of Benefits sheet. 

• Out-of-pocket maximums usually do not include:
• Expenses that are not covered by the plan.
• Any extra costs incurred for not following procedures.
• Charges over the maximums allowed by the plan.
• Outpatient mental health services over the maximum amount allowed under the plan.
• Amounts above the eligible or allowable charges.
• Office Visit Co-payments.
• Prescription drug Co-payments.

Deductibles

The annual deductible is the amount you are responsible for under the medical insurance plan before the insurance carrier will begin to pay. There is a deductible for an individual, as well as for any covered family members.  The most a family will pay in deductibles is limited to three times the individual deductible.  Many plans waive the Deductibles for office visits, prescription drugs, and emergency room services.

Co-payments

Co-payments are charged and paid at the time you receive certain types of services, such as office visits, prescription drugs, and emergency room services.  These charges do not apply to the out-of-pocket maximum. Deductibles are usually waived when there is a co-payment.

Coinsurance