Costco pulls plug on $4 drug plan

Discount warehouse says it was losing money on the program; will instead offer 100 pills for $10.
December 14 2006: 1:53 PM EST
CHICAGO (Reuters) -- Costco said Thursday it has stopped filling prescriptions at $4 for a 30-day supply, citing the costs, but instead is offering 100 pills for $10.
The warehouse club operator had initially matched Wal-Mart's (Charts) plan to sell certain generic drugs for $4 per 30-day prescription. Wal-Mart began its drug discount program in early September, which was matched by rival Target (Charts), among others.
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But at that price, Costco (Charts) was losing money, Chief Financial Officer Richard Galanti said during a conference call with analysts, noting that just the cost of the pharmacist, the bottle and regulatory record keeping was more than $4.
Galanti conceded Costco could lose customers who insist on paying $4 per prescription. Still, under Costco's new program those customers with chronic ailments will ultimately pay 10 cents per pill, compared with about 13 cents per pill under the monthly $4 plan.
"We will certainly share with them what they are paying per pill for $10 by comparison," Galanti said, adding that "sometimes you have to deal with an intelligent loss of sales."
Galanti said customers could still buy 30-day prescriptions, but the price would be higher than $4.