Wal-Mart’s $4 plan not entirely corrupt

STORRS, Conn. “”mdash; The potential to buy more stuff at lower
prices sounds like a godsend for American consumers. But for
Wal-Mart ““ who prides itself on the ideal of “Always
low prices!” ““ this pursuit has not been undertaken
without criticism.

Wal-Mart recently announced that Tampa Bay, Fla., would be a
test market in a larger plan to sell a number of generic drugs at a
price of $4 for a 30-day supply. Wal-Mart should be praised,
despite other problems it faces, for at least attempting to step
into the gap and provide low-cost medicines to those who need it
most.

Not surprisingly though, vocal opponents of all things Wal-Mart
have been critical of this plan. According to wakeupwalmart.com,
their argument seems to center on disputing the number of generic
drugs that will be covered and also pointing out that there are
“775,000 hard-working families of Wal-Mart workers who have
no company health care.”

There is no dispute that there is a health care crisis in the
United States, but the insinuation that Wal-Mart is alone in
struggling to provide affordable insurance to its employees is
ludicrous. What is true is that Wal-Mart is the nation’s
largest private employer so it conveniently provides some alarming
statistics for opponents to use in its shock and awe campaign
against the retailer.

The plan to provide many generic drugs to consumers at low
prices is nothing more than a continuation of the same business
model that has made Wal-Mart so successful. By leveraging the
volume of the company’s sales, Wal-Mart is able to provide
these drugs at low costs.

But by no means should we assume Wal-Mart is doing this out of
some purely altruistic motive. Capitalism 101: Bring the consumer
into the store with low prices and hope they will fill up those
shopping carts with items other than just their generic diabetes
medications. Expanding profits make shareholders happy and the
business grows. Love it or hate it, it’s how the economy
works.

This is not to say that Wal-Mart hasn’t operated in a way
that opened itself up to problems. After all, hiring undocumented
workers for cleaning crews, not providing adequate management
opportunities for women and minorities, and other allegations make
great headlines, but aren’t good for public perceptions of
the company.

The truth is that Wal-Mart has had some missteps and will
continue to since it is constantly under the microscope. But if all
the wrongs that Wal-Mart has caused were that egregious, then
shoppers wouldn’t have shopped at Wal-Mart stores in August
to the tune of $16.98 billion in sales. Many alternatives are
available, but by the looks of the Wal-Mart parking lot, consumers
have made their choice.

The spillover effects of Wal-Mart’s generic drug plan are
already being felt. The competition for market share in a portion
of the $250 billion pharmaceutical business has caused Target to
state they will match Wal-Mart’s plan. Other retailers may
follow their lead and consumers will ultimately benefit.

Wal-Mart cannot address the health care uncertainties felt by
Americans entirely on its own. According to the U.S. Census Bureau,
some 46.6 million people were uninsured in 2005 and that number
will probably rise. But the effort made to address the rising cost
of drugs is commendable ““ even if we don’t all love the
company backing the plan.

Hill is a columnist for The Daily Campus at the University
of Connecticut.