Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Meredith Adler with Barclays Capital.
Meredith Adler - Barclays Capital
Good morning. Can you hear me? A couple of questions. Could you talk a little bit more besides this change in AWP, which is impacting reimbursement rates, could you talk a little bit about kind of how we are seeing, what’s going on that’s making, putting pressure on reimbursement rates? And then also a little bit about why generic pricing or the availability of generic product is not as good as it was?
John T. Standley
I’ll jump in there -- I guess a couple of things. I mean, we have reimbursement rate pressure every year, Meredith and there’s pressure from the third party side because obviously the PBMs are all competing with each other to get clients. There’s pressure from Medicaid, given tight state budgets and so that pressure has been going for several years. It continues this year. When I look at the level of reimbursement rate reduction, what we are seeing this year versus last year, it’s not dramatically worse. What’s really hurting us this year is one, the fact that we are having a little bit tougher time on the generic purchasing side really due to market conditions. We’ve had some consolidation in the industry. We’ve had some issues from the FDA where some source has been restricted, so it’s been a little bit tougher on the purchasing side and particularly as it relates to the second half of this year, I think a slowdown from our perspective in terms of the benefit of new generics, which are very important to pharmacy margin. So those are kind of the big factors that I think are sort of rolling around in the margin today.
In addition, I think there’s been some ongoing impact from the Walmart $4 generic situation that just continues to evolve as it goes.
Mary F. Sammons
And as John mentioned in his comments too, we’ve really grown our RX Savings program, which is a real benefit, gives a lot of value to our customers but it really has had pretty dramatic growth in our mix and I think that’s also a factor.
Meredith Adler - Barclays Capital
Great, and then I have a question about the -- how much the reduction in SG&A is coming from lower fuel? And when do you think you will cycle that?
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