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Archives for October 2006

Don’t Believe the Hype

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Media Promotes Prescription Drug Pricing Stunts at Wal-Mart and Other Mass Merchants While Ignoring Hidden Costs

By Jeff Milchen and Stacy Mitchell
October, 2006. First published in the Providence Journal

When Wal-Mart issued a press release announcing some generic drugs would be sold for $4 at Tampa area stores, its executives undoubtedly hoped for some favorable publicity in Florida media. Instead, they received sweeping headlines across many states like “Wal-Mart to sell generic drugs for $4 a month”— often on page one of major newspapers.

After getting better advertising than even a multi-billion dollar corporation can buy, Wal-Mart naturally decided to milk the publicity by announcing drug discounts in most other states a few at a time. Sure enough, Wal-Mart enjoyed wave after wave of free publicity.

But was Wal-Mart’s promotion really headline news?

First, Wal-Mart is not offering the deal on most generic drugs. Though the corporation issued a 300+ item list of $4 drugs, most items were different dosages and configurations (pills and capsules listed separately), not unique medications. Twelve different variations of the common antibiotic amoxicillin are listed, along with multiple dosages of ibuprofen — already widely available for less than $4.

Unique medications totaled 124 among a few thousand commonly available prescription drugs and those discounted drugs make up less than one-quarter of prescriptions Wal-Mart dispenses and only one of the ten most common generic medications is included in its $4 promotion. But Wal-Mart’s decision to discount a small portion of one product line generated priceless publicity for the corporation’s “low price” image.

The impact was huge and immediate. A poll by the Wall Street Journal found just 13 percent of respondents indicated Wal-Mart or other mass merchants were their usual destination for filling drug prescriptions. After the barrage of media coverage for Wal-Mart’s PR stunt and matching offers by other mass merchants, a stunning 50 percent of those respondents said they would be likely, very likely or “absolutely certain” to fill prescriptions at these stores.

They should think twice.

True, some people who need one of the chosen drugs will save money. But unless shoppers check Wal-Mart’s list in advance, they’re likely to become victims of a bait-and-switch. Consumer Reports magazine repeatedly has found independent pharmacies beating Wal-Mart and every chain drugstore on price in their periodic investigations (see a summary of their 2018 survey).

Contrary to common perception, the evidence overwhelmingly indicates independent pharmacies, not Wal-Mart or other chains, offer the best value.

In 2003, the state of Maine researched prices of 15 common prescription drugs at independent and chain pharmacies of all kinds statewide. The 10 lowest-priced pharmacies all were independents, beating all five Wal-Marts in the study. Studies by New York City and the Senior Action Council in New York also showed lower drug pricing at independents than chains.

So don’t assume the buying power of chains translates into lower price. Through group purchasing efforts, independent pharmacies compete vigorously on price and do it while offering more than just pills. In 2003, the venerable Consumer Reports magazine surveyed 32,000 readers about their experiences at thousands of pharmacies, including independents, chains and those within supermarkets and mass merchants.

Though mass merchants had an edge on price alone, independents trounced the big boxes (as well as supermarket and drug chains) in overall value by “an eye-popping margin.”

The survey found independents were more likely than all chain stores to have a needed medication, got out-of-stock drugs faster, and provided more personal attention.

And personal service from your neighborhood drugstore means more than asking “how’s the family?” For anyone taking multiple medications, their pharmacist’s attention can be crucial to avoiding dangerous drug combinations that kill thousands of Americans annually.

Unfortunately, the credulous coverage of Wal-Mart’s drug promotion is typical, not exceptional.

Last November, the company touted a self-commissioned study asserting that Wal-Mart saved $2,329 annually for an “average” household — a  remarkable claim that proved grossly inflated due to serious flaws in methodology. Yet national media outlets promptly trumpeted the results (some still cite the study) without offering any independent analysis.

Wal-Mart’s act had one positive impact—increasing awareness and price competition on generic drugs. But the massive promotion budgets of national chains can lead even critical thinkers to perceive, often wrongly, that chains provide greater value than our neighborhood businesses.

Reporters and editors should help their readers make fully-informed choices by providing independent analysis, not just a pro forma quote from a critic, when Wal-Mart issues its next press release.

Americans should know they don’t have to choose between competitive prices and quality service—they likely can receive both at local businesses that invest more in their products and services than for public relations campaigns.

Stacy Mitchell is a senior researcher with the Institute for Local Self-Reliance and is the author of Big-Box Swindle. Jeff Milchen co-directs American Independent Business Alliance.

© 2006 Jeff Milchen and Stacy Mitchell

A Blow Against the Corporate Empire

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California community blazes a trail that others should explore

By Jeff Milchen 
Published October 2, 2006

In 1999 Eureka, CA became one of the first communities to fight Wal-Mart at the ballot box and win — soundly defeating a ballot initiative that would have forced a change in zoning laws to allow a new “superstore” near the city’s waterfront.

Residents celebrated a hard-won victory, but some questioned why a corporation could force them to fight a purely defensive campaign in which “victory” meant merely maintaining the status quo.

Three years later, another global corporation, Maxxam, funded an attempt to recall the District Attorney in Eureka ‘s (Humboldt) County, who had the audacity to aggressively watchdog and even sue the corporation for alleged fraud. Voters thwarted the intimidation and kept the man they elected in office, but again at enormous cost of time and money.

More people began to question why they could be forced to defend against the political agenda of distant corporate executives. They wondered what could be accomplished if absentee-owned companies were barred from bankrolling candidates and ballot questions to advance the corporate agenda, enabling citizens to focus their energy on proactive work.

They now have the opportunity to find out.

In June, Humboldt County residents passed Measure T, a ballot initiative that forbids non-local corporations and other outside organizations from contributing money to political campaigns within the county. In a hotly-contested battle, citizens passed into law perhaps the most significant challenge to corporate political “speech” since Montana citizens voted to ban corporate expenditures on ballot questions in 1996.

Like Montanans, Humboldt citizens likely will face a second hurdle in their quest for self-governance: corporate lawyers (perhaps including some now serving on the U.S. Supreme Court).

Soon after the people of Montana decided elections should be a corporate-free activity, the state Chamber of Commerce and other groups successfully challenged the law as a violation of corporations’ “free speech” rights.

A federal appeals court sided with the Chamber and discarded Montanans’ efforts. The judges cited the U.S. Supreme Court’s First National Bank of Boston v. Bellotti ruling, which nullified a Massachusetts law that forbade corporate spending on ballot initiatives.

As with other key challenges to precedents that suppressed democracy and human rights, the outcome may depend more on social circumstances than legal points. Virtually every advance for human rights in the Supreme Court (e.g. Brown v Board of Education) has been preceded by shifts in public opinion and visible demonstrations of demand for change. At least in part due to fear of social upheaval and undermining the Court’s authority, the Court follows.

It’s time to instill that concern in the Justices again.

For judges, overturning the will of citizens in a single community — especially one that corporate interests marginalize as a hippie enclave — is no cause for concern. But to overturn an ordinance replicated in dozens of communities dispersed around the country is a different equation altogether. In other words, it’s up to us to build irresistible pressure for judges to do the right thing.

Citizens should realize that federal action to reduce corporate dominance is unlikely in the near future and consider such local actions as a necessary means toward building the movement necessary to subordinate corporations to democracy.

In those states and communities permitting ballot questions, revoking corporations’ ability to corrupt what should be the purest form of democracy may be the most vulnerable point of attack.

But such organizing must be approached as a long-term commitment, not a quick fix. Measure T was preceded not only by two instructive local lessons in corporate power, but also by years of local educating and organizing by locals through Democracy Unlimited of Humboldt County. The organization built awareness of the destructive impacts of corporate political power on the lives of residents and helped people recognize that citizens themselves — not elected officials — had the ability and responsibility to change the status quo.

That’s not to say such ordinances can’t be accomplished more rapidly, especially in communities where people already have witnessed corporations overturning democratically-enacted decisions through running initiatives backed by overwhelming advertising. Wal-Mart alone has created fertile ground in communities nationwide, from Bennington, VT to Flagstaff, AZ . And with more educational work on these issues nationally, local campaigns will have a stronger foundation beneath them.

Through wildly creative interpretation of the Constitution, our courts have repeatedly subordinated the rights of citizens by elevating corporations to entities with political “rights.” Almost every national representative of the dominant political parties accepts this perversion of our Constitution (few have even considered the issue), so building a grassroots Democracy Movement is essential to overturn those precedents.

Citizens of Humboldt County have provided one concrete model to help advance this Movement. Let’s ensure their pro-democracy ordinance is joined by dozens more by the time judges decide whether to advance corporate rule further or help restore the long-unrealized ideal of rule by the people.

The writer directs ReclaimDemocracy.org. See our large library of resources on corporations and ballot initiatives and contact us to for help with related efforts.