Wal-Mart, the world's largest retailer, said Sept. 27 it will offer 24 new $4 generic medications. That raises the number of prescriptions the program covers to 361, including three $9 prescriptions for birth control and fertility pills.

While the expansion could generate more sales for Bentonville, Ark.-based Wal-Mart, national drugstores have shrugged off Wal-Mart's discount plan, which was introduced nationwide late last year.

"Competitor price promotions have had very little impact on our business," CVS said last week.

Despite Wal-Mart's $4 offerings, comparable same-store sales have grown for CVS and Walgreen's during most of 2007, Morgan Stanley analyst Mark Wiltamuth said in a note to clients.

Standard & Poor's 1,500 Drug Retail index -- which includes drugstores CVS Caremark Corp., Walgreen Co. and Longs Drug Stores Corp. but not Wal-Mart -- rose 5.1 percent for the year to date through Oct. 2.

Meanwhile, discounter Target Corp., the nation's second-largest retailer, also offers $4 generics, but it also appears unaffected by Wal-Mart's pharmacy competition. Last month, Target said its same-store sales in August rose 6.1 percent, beating Wall Street estimates. The company does not break out same-store sales for its pharmacy segment.

One of the main reasons Wal-Mart hasn't hurt drug retailers relates to customer demographics.

Wal-Mart's program caters to uninsured customers, which compose only about 5 percent of national drug retailers' prescription base, analysts say. They say Wal-Mart's pharmacy could nab customers from the independent drugstores, but fewer from national drug retailers who primarily serve those with insurance.

With an estimated 95 percent of prescription sales covered by insurance, customers paying a $5 copay for generics at other drugstores likely wouldn't be lured into Wal-Mart for a $1 savings.

What's more, drug retail analysts say people with drug coverage will probably opt for the services such as 24-hour stores and drive-throughs offered by other drug retailers like CVS.

"CVS customers want convenience, a store in their neighborhood. And the Wal-Mart experience is a little different, you have to drive," Wachovia Capital Markets health care analyst Matt Perry said.

Another reason Wal-Mart is not expected to harm those drug retailers is due to the growth in the generic drug market.

Generics generally offer drug stores a wider margin than branded drugs, although their prices are lower for customers. That's because generic makers tend to have lower costs and expenses than their branded counterparts, who must cover high research and development and marketing costs. In turn, generic makers can sell their drugs to retailers at lower prices.

Initially Wal-Mart's program primarily targeted the uninsured and members of Medicare's prescription drug plan, Part D, who fell into a coverage gap. The $4 drugs for diabetes, heart and high blood pressure particularly drew in older shoppers.

"It's a very applicable program for many of their (uninsured) customers, even if it may not be taking a lot of share, if any, from the chain drugstores," UBS retail analyst Neil Currie said.