Politics from the Palouse to Puget Sound

Tuesday, September 26, 2006

"Market Power"

Excellent editorial from Investor's Business Daily:
Health Care: Wal-Mart (WMT) has plans to sell nearly 300 generic medications for $4 each starting Friday. How will its raging rivals handle this?

Because of its success and size, both of which have made it a fat target for unions and the petulant class warriors of the left, Wal-Mart believes it will be able to sell 30-day supplies of 291 generic prescription drugs for $4 each to both insured and uninsured customers. Typically, a month of generic drugs costs between $10 and $30 at retail.

For now, the $4 price will be limited to 65 Tampa, Fla.-area Wal-Mart, Neighborhood Market and Sam's Club pharmacies. It is expected to spread to the entire state by January and then into "as many states as possible next year," said Lee Scott, CEO of the Bentonville, Ark.-based retailer.

The benefits won't end at Wal-Mart's exits. Drugstore chains will have no choice but to try to match the lower prices — just as other stores now do on a wide range of goods, from groceries and clothes to consumer electronics and appliances.

Consumer costs for prescription medication is a favorite bludgeon of Democrats and leftist activists. They have demonized drug makers with almost the same zeal they apply in casting the oil industry and Wal-Mart as devils incarnate.

Granted, paying for lifesaving and body-healing drugs is not easy for millions of low-income Americans. We bet these people will gladly welcome Wal-Mart's solution.

The question is not so much how Wal-Mart will make a profit — its remarkable productivity and its size, which lets it buy in bulk and sell at low prices, should take care of that — but how will the anti-Wal-Mart bloc respond?

The drumbeat against the chain is based on complaints of low wages and poor health care coverage for its workers. Last year, Wal-Mart began an innovative health care plan for its lowest paid workers and still got clobbered by its union critics and the left.

Will Wal-Mart foes at least recognize that poor Americans, the very people they purport to represent, will benefit from plunging drug prices?

That might be too much to ask from people who yelp about Wal-Mart's labor policies yet refuse to see the benefits of low prices for the millions who live in or near the 1,100 neighborhoods across the country where Wal-Marts can be found.
In the last study we saw, the per-family savings came to $2,300 a year.

Wal-Mart believes its price cuts will help as many as 2.7 million uninsured Floridians get the drugs they need. That's a significant number of people who will be more grateful to a capitalist corporation than to the envious rabble rousers who claim to be selflessly working on their behalf.

Blocking the growth of a chain that brings jobs, value and almost unbelievably low prices on medicines suddenly becomes a more difficult task.

Wal-Mart's price drop sounds like a solid health care plan to us. We bet those who'll benefit the most will agree.
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