« We're Being Out-Diplomacitized! | Main | Dictator, Huh? »
September 21, 2006
Wal-Mart...Good?
Some of my rightwing readers may think this'll make my head explode, but Wal-Mart's embarking on a new initiative to use its size and weight to bargain down the prices on generic prescription medications. In other words, the company I always accuse of acting like a monopsony is now going to use their might to act as consumer advocates on health care. Which will be good for consumers and bad for Pharma. Hooray!
It's worth saying, before the flood of comments and e-mail praising Wal-Mart's brave and bold move, that this is exactly what I and most Democrats are always calling for the government to do, and it's precisely the apparently unfair tactics the Republican Party barred Medicare from using in the 2003 Modernization Act. It's rather weird that Congress felt the need to outlaw Medicare, which is trying to get low prices for seniors and stop busting the budget, from bargaining down pharmaceutical prices, but thinks Wal-Mart, which is out for profit, should run wild.
Cross-posted at Tapped
September 21, 2006 | Permalink
Comments
Glad you found a silver lining there.
Side note: did I miss it or did you praise Wal~Mart for it's Sam's Clubs and their similarity to the beloved Costco model? You know, pay extra to get in the door, no service, fewer employees, must purchase by the ton, etc?
I really am not sure why some Republicans were against bulk purchasing by the government, other than the federal government should not be involved in the drug resale business anyway.
As a Fiscal Conservative and respecter of proprietor’s rights, I have no objection at all. You see, we the evil FCs don't mind when a firm engages in commerce. We object when the government, and their overwhelming economic and police power, engages in commerce in competition with business.
This reminds me, I am almost out of shotgun shells, need to make a Wal~Mart run this weekend to one of the Alexandria, VA stores.
Posted by: Guy Montag | Sep 21, 2006 2:37:21 PM
There is a difference in government bargaining and private corporations or individuals bargaining. Government, by its very nature has powers that corporations don't have. Wal-mart can say, give us this cheaper or we won't buy from you. Government can say give us this cheaper or we will take away your patent. It is this differce in kind, not degree that makes many uncomfortable with Governments 'negotiating.'
Posted by: Dave Justus | Sep 21, 2006 2:42:14 PM
2 things: For Repubs, corporate profit is religion.
2nd, even though Wal-Mart's efforts in that vein may have real benefits to consumers, for other companies, like Huffy, and Vlasic, they have been disasterous.
While bikes and pickles clearly are discretionary spending, very often prescription drugs are mandatory for health and life. Bottom line is, I'm sure Glaxo et al will find another way to screw the public and keep their profits as high as they already are.
Posted by: SteveAudio | Sep 21, 2006 2:49:42 PM
SteveAudio,
Seems you have some vast knowledge that escapes the corporate types. When are you going to be opening up shop to compete with them on niceness and price?
Seriously, from reading posts like yours it sounds like there is a vast pool of untapped talent that knows how to run a business without an evil profit.
Yes, it has been tried in spades, during the .com bubble where people were given venture capital and ran their businesses until it was all gone.
Now, if you apply your modernized model to drugs you should be able to plow Wal~Mart under, yes?
Posted by: Guy Montag | Sep 21, 2006 3:02:47 PM
What this means is that Walmart has decided that a portion of the monopoly rents enjoyed by big pharma should accrue to Walmart as it extends its dominance in the retail channel. A classic example of leveraging monopoly/monopsony power.
Oh, and also a way to (more than likely) eliminate the notion of a pharmacist who knows who you are, and ultimately to control the US drug formulary (because if you can't sell it through walmart, why bother)...
Posted by: paul | Sep 21, 2006 3:05:06 PM
Well, one thing that just dawned on me is another recurring theme that seems to crop, like that "all pokitics is local" one that is getting so much traction again. Still waiting for someone to quote LBJ on that (or whomever he was quoting) rather than treating it as something new.
The exact argument against Wal~Mart was made against: The Sears and Robuck corporation, A&P, K-Mart, Kresge, various corporate drugstores, and quite a few others.
None of these enterprises resulted in the destruction of a free market. Government regulation and interfearance has done more to consolidate markets than any corporation did.
Posted by: Guy Montag | Sep 21, 2006 3:19:47 PM
Well, I disagree that it was Augustine's Neo-Platonism that led him to elevate his idea of concupiscence as the primary sin that affects human beings. Rather, it was St. Athanasius' emphasis upon substitutionary atonement that really provided the framework for Augustine's views. . .
Oh, I'm sorry. The massive amount of conservatarian faith-based bloviating in this comment thread made me think it was more about repeating irrelevancies than addressing the issue at hand.
Posted by: Stephen | Sep 21, 2006 3:38:28 PM
Stephen,
I take your post to mean that you would like me to pick up some shotgun shells for you too.
I use Winchester 12 Ga., 3 Dram Equiv., 7 1/2 shot. Those good for you? Sadly, my Wal~Mart does not sell by the case any more, have to get "100 packs" (4 boxes per container).
Let me know, k?
Posted by: Guy Montag | Sep 21, 2006 3:48:18 PM
Government can say give us this cheaper or we will take away your patent.
A government that doesn't actually follow the law will do that. You know, like the current administration.
Posted by: Dr. Squid | Sep 21, 2006 3:57:18 PM
And when Wal-Mart says "Give us this or we won't buy from you" and accounts for over 50% of your sales, what they're really saying is "Give us this or massively shrink/close your company."
When the government threatens to revoke your patent, you can sue them. When Wal-Mart forces you to sell at near-loss or close up shop...you can sell at near-loss or close up shop.
Posted by: Kylroy | Sep 21, 2006 4:07:46 PM
I wonder if this will increase or decrease the amount of dangerous imported drugs coming into the country.
Posted by: skewter | Sep 21, 2006 4:10:15 PM
Kilroy,
You could sell direct.
Well, you could if the government wasn't standing in the way of that.
Posted by: Guy Montag | Sep 21, 2006 4:16:21 PM
You could sell direct.
Well, you could if the government wasn't standing in the way of that.
Let me guess, the government has its iron boot on the neck of the direct-to-consumer pickle market.
Posted by: skewter | Sep 21, 2006 4:23:46 PM
What skewter said.
You can sell direct - but who the hell wants to buy their groceries, toiletries, and clothing from a wholesaler? What direct market exists there is already pretty crowded. Any attempt to transfer the volume of business represented by the loss of a Wal-Mart contract to a direct market is doomed to failure - whatdo you think would happen if Proctor and Gamble tried to sell a comparable amount of merchandise without the aid of America's largest retailer?
Posted by: Kylroy | Sep 21, 2006 4:37:08 PM
Let's see.....
WalMart uses their buying power to lower drug costs, just as they do most everything else and somehow, because it's not 'government', you can't get behind it.
This reminds me of concealed carry. In my state, citizens get as much, or in some cases, more training than police in safety, proficiency and knowledge of the lawe and the use of deadly force. They get FBI background checks just like police for criminal history history of domestic vilence, drug and alcohol abuse. By any means of measurement, they are "good guys" that should be carrying weapons, but because they are not 'government', the libs are unhappy.
Posted by: Fred Jones | Sep 21, 2006 4:37:58 PM
I think this is a great move for consumers, but not because of the failures of the US healthcare system or of government. Wal-Mart spotted a market failure, and plans to make money addressing it. They're aimed square at generics margins, much of which are earned not by chemists but at retail. It has nothing at all to do with on-patent margins, the main target of government bargaining.
Posted by: wcw | Sep 21, 2006 4:41:51 PM
Most conservatives didn't agree with the Republicans' decision to bar Medicare from bargaining down drug prices. In fact, most conservatives didn't think the government should be buying people drugs in the first place. That being said, the only conservatives who oppose saving taxpayer money are those connected with the pharma industry.
Just like the only Democrats opposed to saving taxpayer money are in league with Big Labor(I'm thinking of Davis-Bacon here, which costs taxpayers billions).
Posted by: Adam Herman | Sep 21, 2006 5:12:37 PM
"WalMart uses their buying power to lower drug costs, just as they do most everything else and somehow, because it's not 'government', you can't get behind it."
It's nice that Wal-Mart's race to the bottom is doing consumers some good here. I'd just rather have an organization that is answerable to me be the one bargaining on my behalf, rather than one that isn't.
Posted by: Kylroy | Sep 21, 2006 5:19:43 PM
Of course, you still won't be able to get Emergency Contraception at WalMart (at any price).
Posted by: CParis | Sep 21, 2006 5:30:49 PM
Kilroy and skewter,
We are talking about legal DRUG sales here, not the pickles and other items that you are attempting to confuse the issue with. Yes the government does have it's iron boot on drug sales. Perhaps this is news to you?
Posted by: Guy Montag | Sep 21, 2006 6:16:07 PM
Guy Montag:
Respectfully, bite me. You're being purposely obtuse. Is it any benefir to any consumer anywher in the US for WalMart to bankrupt American companies, putting Americans out of work?
Huffy bikes are no longer made in the US thanks to WalMart's aggresive pricing. Did that have to happen? No. They're just greedy bastards.
And straw men are idiotic. I believe in profit, how else would I make a living doing what I do. I just don't believe that WalMart should make a profit while most of its employees get there health care paid for by you and me, taxpayers.
Idiot.
Posted by: SteveAudio | Sep 21, 2006 6:55:33 PM
apologies for misspellings, I'm using an unfamiliar computer.
Posted by: SteveAudio | Sep 21, 2006 6:56:43 PM
SteveAudio,
Thanks for your input. Now, when you become dictator you can tell everybody at every level of the supply chain where to buy things so that the "correct" people can profit.
Until then, there is such a thing as a free market, when the government is not in the way, and free will, no matter how much they may ruffle your sensibilities.
Posted by: Guy Montag | Sep 21, 2006 7:00:49 PM
I am not reading twenty-two comments right now, so somebody else may have said this, but my guess is, Wal-Mart's prices are already pretty low. So what's to stop them from keeping their asking price for drugs the same or almost the same but paying a lot less for them when they buy them? Market forces or not, it wouldn't suprise me if they tried this.
Posted by: Brian | Sep 21, 2006 8:00:59 PM
I'm willing to discuss things with people who disagree with me, even past the point that others give up.
But damn, conservatarians are impossible.
Here's this:
I really am not sure why some Republicans were against bulk purchasing by the government, other than the federal government should not be involved in the drug resale business anyway.
Good example of people who would intentionally wish to sabotage a government program in order to make sure that their ideas about government are "proven."
Or this:
Government can say give us this cheaper or we will take away your patent. It is this differce in kind, not degree that makes many uncomfortable with Governments 'negotiating.'
Well, gee, the government could just tell everyone to do whatever it says or it will send troops to shoot everyone. Or the government could tell GlaxoSmithKline to give away its medicines or it will pass a law making the company illegal. Except of course, that really can't happen.
The exact argument against Wal~Mart was made against: The Sears and Robuck corporation, A&P, K-Mart, Kresge, various corporate drugstores, and quite a few others.
I suppose you mean that there is an argument being made that Walmart will destroy America, which was made against all these other companies. Okay, I guess. It's kinda like the arguments that are made whenever there is a minimum wage increase being debated, or when OSHA mulls new standards, or when the FDA forces a drug off the market.
None of these enterprises resulted in the destruction of a free market. Government regulation and interfearance has done more to consolidate markets than any corporation did.
And I'm sure it was done by establishing a minimum wage and then raising it every 15-20 years.
We could, I suppose, look at actual history and chart the rise of monopolies and near-monopolies along with the level of "government regulation and interference." I wonder if we would see more monopolies before laws were enacted outlawing them or less? How about the amount of mergers and industry consolidations that happened before various "deregulations" took place versus after?
I have yet to know, see, hear, read about or hear a rumor of an actual liberal who sees the government as the answer to all problems and increased government regulation as an unqualified good. I would like to hear about such a person, especially if they are an elected official or even a person of influence in liberal circles. That would be fascinating to me.
However, I can name more friends and acquaintances than I have fingers who believe that all government regulation is an unqualified negative, and who say as much regularly. Accusations are made against liberals that "government involvement = good" is an article of faith precisely because "government involvement = bad" is an article of faith among conservatarians.
Walmart was a large corporation long before liberals started to grumble about it. It was a dominant player in the discount retailing world for quite a while before liberals started to oppose it. The issue is not size or success as the conservatarian fairy tales require; rather the problem is the way in which Walmart abuses its workers and suppliers. That is to say, the individuals working for them and their suppliers whose livelihoods are threatened by Walmart's practices.
It's great when businesses large and small succeed. But when their level of success is dependent upon the mistreatment of people, no amount of smug lectures about the supposed evils of government interference and "free markets" will change the fact that said business needs to be reined in.
Posted by: Stephen | Sep 21, 2006 8:08:31 PM
The comments to this entry are closed.
