In a tremendous demonstration of market power and benefit to consumers, Wal-Mart has decided to offer some generic versions of medicines for only $4 per prescription. The market reaction in other drug companies was swift and brutal with the two largest drug store chains, Walgreens and CVS, each losing at least 7% of their market value as stock traders reacted (probably over-reacted) to the competition. Other drug store chains and generic drug makers also had significant sell-offs.

The way to look at the market impact of Wal-Mart's announcement is that the market value loss in all those companies is a reflection of how much less consumers will end up paying for medicines because of the move. It is not so much about the 291 drugs on the initial list of the $4 program, but the possibility that other more profitable drugs will eventually be targets of Wal-Mart's competitive power.

It's a subject I'll be writing more about soon, but this is another great example of Wal-Mart benefiting the consumer and particularly the middle- and lower-income consumer. Yet the Democratic Party, nominally the champion of the little guy, has made attacking Wal-Mart one of its primary campaign strategies despite the fact that many Wal-Mart shoppers are Dems and, given that they could be shopping elsewhere, it is reasonable to presume that they love saving so much money at Wal-Mart.

TOM ADDS: Speaking of Wal-Mart, USA Today ran a long, largely favorable profile today of the retailer's ongoing shift to a pro-environment business strategy.

ROSS ADDS: According to the WalMart website, the $4 generic drug program is
starting in Tampa, is then expected to be rolled out in the rest of
Florida by January, and then nationwide as quickly as they can.

Here is their press release about it.

And here is the list of $4 generic drugs.

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