The WSJ Health Blog notes that Wal-Mart has saved its customers more than $1 billion with its $4 generics program:
Wal-Mart’s doing a bit of chest thumping this morning, claiming that its $4 generics program has saved consumers $1 billion — $1,032,573,012.61 as of March 10, to be precise.
These savings were brought about not by government cost controls but by that bête noire of faux-progressives everywhere—free market competition. And it is probable that actual consumer savings far exceed the Wal-Mart numbers:
The ripple effects of the program may have driven additional consumer savings, the company pointed out. Competitors including Kroger and Target followed Wal-Mart with their own $4 generics programs.
The market works, folks. Wal-Mart wants customers in its stores rather than those of its competitors, so it provides cheap genereic drugs to draw them in. If the government would get the hell out of the way, similar things would happen throughout health care.
Comments 4
I think you’re very confused about this. I thought you were against massive cheap drug supply and importation because it undermines your R&D base. Also, government systems - because of their huge spending power - can buy drugs much more cheaply, and where the drug companies have set rip off prices there have been successful challenges that have recouped vast sums - eg from Roche by the UK NHS.
Posted 17 Mar 2008 at 2:51 pm ¶I think Marc is very confused about this. catron has it right.
1. They are _GENERIC_ drugs, and
2. They are selling them at a loss (as a loss leader).
As a result, the suppliers have not been forced, or coerced into providing the goods at an unsustainable price, nor have the manufacturers. It is NOT likely that the government can a) purchase the drugs for less than what WalMart sells them for, or b) will supply them at a loss.
It is the free market: WalMart acknowleging that getting customers in the door is worth whatever profit margin they may have collected on these drugs, and taking advantage of the situation. This is to the mutual benfit of both parties (Wal-Mart and it’s customer) - which is the driving force in a free market.
Posted 17 Mar 2008 at 3:24 pm ¶Wal-Mart is on the record as saying they are not loss leaders, and generic drugs of course take away profit from the primary brand makers. I’m not arguing against cheap drugs - quite the reverse - but it doesn’t square with support for a system that aims to extract maximum profit throughout the value chain.
Posted 17 Mar 2008 at 5:23 pm ¶While I’m 1-million percent free market, I just want to mention that $4 is a price many can afford for something that they [probably but not always] need.
If a screening colonoscopy was $100 or $200 for instance instead of the more typical $500-$1000, many of these people still wouldn’t get it.
I’m not sure what it would take for people to stop spending money on ciggies and whiskey and, instead, save up for health needs, but I’m just sayin’…
Also, there is no “get ‘em in the door” factor for non-retail clinics to REALLY drive the prices down.
Posted 17 Mar 2008 at 6:45 pm ¶Post a Comment