A $4 reason to change state law

Outdated law forcing drug price hike

Thursday, November 30, 2006

Wal-Mart and Target no doubt think they can pump up their profits by selling generic drugs at a steep discount - as low as $4 per prescription, for perhaps 140 different drugs.

Get folks in the door to buy cheap medicine, the idea goes, and they'll purchase other things that make money for the stores overall.

Not so fast: Colorado's "Unfair Practices Act" won't let consumers reap all the benefits of this price war. It's another reason the legislature should repeal this statutory relic when lawmakers return to work in January.

As we noted earlier this month, the 1937 law bars retailers from selling items "below cost" - a concept that is notoriously hard to define. The act recently forced the Safeway and King Soopers grocery chains to abandon a discount-price gasoline promotion for regular shoppers.

Now the law has forced Wal-Mart and Target to scale back the generic-drug plans they have been rolling out across the country. To stay on the good side of the law, the retail giants will post the $4 price tag on most 30-day generic prescriptions, as promised. But Wal-Mart also says 55 other drugs that have a higher wholesale price may sell for $9 or more. And Target will also keep prices higher than necessary on some drugs.

The chains are still working out the pricing regime. Target says at least 14 drugs will be affected, but in some cases, as dosages vary, other drugs may have to be excluded from the $4 category as well.

Not everyone of course is sympathetic to the big chains' discount goals. The National Community Pharmacists Association fears the program will undercut neighborhood pharmacies, and no doubt will take this case to lawmakers in support of the below-cost pricing law. We hope legislators understand that it is not their job to shield some retailers from competition - no matter what product they sell.

In the meantime, at least Coloradans won't suffer alone. Nine other states, including California, Pennsylvania and Wisconsin, have similar laws that ban "predatory pricing."

Sorting through this maze is creating a needless pain for retailers who want to operate legally, and shoppers, who'd love to save money. Fortunately, aspirin remains available without a prescription.