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Wal-Mart Helping the Little Man

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Author: Chris Schaffer

Although it caused quite a stir when the idea was first spoken of, the plan for Wal-Mart to offer generic prescriptions for $4 each has faded from the limelight. A perfect time to approach the topic again. Mainly, how does this sort of price slashing benefit the American mega-corp? And, how do the ripples of this venture effect the rest of the pond?

To tackle the first question is very easy. Why would such a seemingly profit hungry corporation suddenly drastically slash the prices on medications? Because they expect to make a great deal of net revenue doing it. While viewed by many as a selfless act, the Wal-Mart drug plan is not intended to run at any kind of loss. Not a single statement Wal-Mart has made says anything about that, in fact, they readily admit they expect and want to profit from this program. Because Wal-Mart can buy enormous quantities of product, the price for doing so is extremely low per unit. However, instead of making the kinds of profits that turn the heads of any suspicious consumer, they will do so at a much lower profit margin per unit.

And that is where the magic is. They will make less money in each sale, but the idea is that low prices attract large numbers of people. In doing this they increase overall profit by simply driving up the volume of sales. There is no happy, selfless, or saintly motivation here, only the raising of the bottom line in a way that only very large and economically powerful corporations can do. However, for every action there is a reaction.

In an article by David Harsanyi of the Denver post, Dr. Jeffrey Zax, an economics professor at the University of Colorado ay Boulder, was quoted as saying this.

I don't see any downside to it. I think it's a terrific idea. It's hard to imagine what downside there could be. The only change will be that others will try and meet these prices."

But, of course, there is a downside. Most private pharmacists have no way of matching these kinds of prices. It has long been the same argument against Wal-Mart that they drive anything smaller than them out of business. This is certainly a consequence worth noting. There is another very human consequence to note.

People in America have long carried the heavy load of the insurance industry and its less than helpful attitude about helping people. Now we not only carry the weight, but suffer from it in very real ways. We are a country that does not take preventive measures in health care, we only react to illness and injury that poses a great threat to us. We suffer many ills because we cannot afford to treat them before they stop us. Four dollar prescriptions can make a very real difference in this climate. A family formerly faced with the choice of food or medicine will be able to afford limited health care much more easily. This certainly does not cure the problem of the system, but at least it staunches the bleeding. We must weigh in our minds and hearts if the price of losing small pharmacies is equitable in terms of gains in affordable medicine.

This could be a rare example in modern times of dedicated work toward raising profits is working to also help people live better. Not only that, but it has been done without mandate by the federal government. This may be a very small change, possibly ambivalent, step in the right direction. But in a nation where many people cannot afford insurance for health care at all, even troubled baby steps are better than digging deeper trenches.

About the author: Chris Schaffer graduated with his BA in psychology from Mesa State College in 2006. He is the founder of the Sustainable Democracy website and movement.

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