The Spectacle Blog

Re: Oppressively Low Prices

By on 9.23.06 | 6:49AM

The News & Observer of Raleigh has its own story today on the response to Wal-Mart's $4 generic drugs story, with two notable quotes:

Wal-Mart's new program is particularly worrisome for the nation's nearly 18,000 independent pharmacies.

"Matching them for a cash-paying customer is probably something we'll be forced to do," said Scott Townsend, who owns Wake Forest Drug with his wife, Debbie.

"I think what they're doing is in very poor taste. If we don't respond in kind, then we look like the bad guy, when in fact they're not doing anything that's truly a benefit."

Very poor taste? If it's not truly a benefit to the consumer, then how can you possibly look like a bad guy? And if it's not truly a benefit, why does that prohibit you from responding in kind? The story makes it clear, by the way, that it really is a great benefit, especially for the uninsured. It's amazing how Wal-Mart draws irrational reactions out of people. But then there's this clear logic:
Duke University economics professor Frank Sloan did see an upside to Wal-Mart's new program. If more people bypass their insurance and slap down four singles for these prescriptions, the money the insurance companies save could ripple through the industry, he said.

"The end result is that the expenses are lower and the premiums are lower," he said. "This is an opportunity to save some money."

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