Wal-Mart (WMT) to offer more $4 generic drugs

It must not be much fun to compete with Wal-Mart (NYSE: WMT) in the prescription drugs business. The world's largest retailer keeps dropping prices.

Today, Wal-Mart said it would extend its $4 generic drug program to include a number of additional treatments for "problems including glaucoma, attention deficit disorder, fungal infections and acne," according to MarketWatch. For other items like birth control pills, it will charge $9 against a national average of $30.

Wal-Mart says that the program will save consumers $600 million over the next year, with some of the savings being tremendous. While antifungal Lamisil cost an average of $337.26 one month ago, its generic equivalent, terbinafine, sells at Wal-Mart for $4 for a commonly dispensed quantity of up to a 30-day supply, the company said.

The low-cost drugs raise the question of whether Wal-Mart makes money on them at all. It may use the price points to drive traffic to its stores. If so, companies like CVS Caremark (NYSE: CVS) would watch their stock prices take a beating.

The generic prices also raise the issue of unfair competition. If Wal-Mart does offer the drugs at below cost, is it building an antitrust case for other companies?

The new pricing may be good for consumers, but that doesn't mean the government won't look into it.

Douglas A. McIntyre is a partner at 24/7 Wall St.