Because of its size and success, Wal-Mart is an easy target for criticism. But my hat’s off to Wal-Mart for beginning to make generic drugs available for only $4 per prescription. The savings to customers can be 50% or more for one of these drugs. It’s a small step in the right direction. The rollout begins in Florida with only 291 generic drugs available initially out of 2,100 products available. This number will most likely increase over time.
Some analysts say it won’t make much difference overall to the prescription drug market. Some critics say that this is largely a PR move to deflect attention from what they say is Wal-Mart’s negligence in making health insurance affordable to its employees. Regardless, this is bound to help consumers who are being hit by increasing health care costs.
The fact that Wal-Mart does not expect these drugs to be a “loss leader” is evidence that there is tremendous margin at the wholesale level for these drugs. As Wal-Mart exerts pressure on these margins there should be continued progress in making prescription drugs more affordable and accessible.
As I read this, I was reminded of the letter James wrote in the New Testament. In the second chapter he warns the community of Christ-followers about economic favoritism – paying special attention, catering to the rich in the congregation while discriminating against the poor. James says that such behavior is an insult to the poor, and I believe, God, who loves them. I think that there is an important marketing insight here. Much of “sound” marketing strategy encourages a company to keep climbing up the value chain, pursuing wealthier customers with increasingly higher value added products and services. In light of James’ admonition, maybe those of us who are followers of Christ need to turn our business imaginations on a “market” that we largely ignore.
CK Prahalad provocatively challenges us in this direction in his book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. He demonstrates that innovative business strategies that serve the poor can be very profitable. (The poor, he notes, are 4 billion people living on less than $2 per day.) This is not an issue of profiting from the poor, but providing goods and services with world class quality to the poor in a way that is also sustainable from a business perspective. It’s interesting to note that Wal-Mart founded in 1962 embraced a strategic purpose as a company to help "people of average means to buy more of the same things previously available only to rich folks.”
Let’s reread those passages from James’ letter and let his admonitions challenge our compulsive favoritism for the rich in our business strategies. And, perhaps, as we do we can stimulate a wave of business innovation that serves those of more humble means.
