Wal-Mart pharmacy programs has industry rethinking benefit approaches.
Wal-Mart is offering a series of programs to administer exclusive pharmacy benefits for employers.
The retailer is offering businesses low-priced drugs if they sign up to buy directly from Wal-Mart’s network of in-store pharmacies, rather than contracting to buy drugs through PBMs.
“Their approach is representative of a fundamental shift away from, and independence from, the traditional pharmacy benefit management model,” says Robert Taketomo, PharmD, MBA, president and CEO of Ventegra in Glendale, Calif. “As more companies seeking innovative and transparent solutions adopt this approach, the existing PBM infrastructure may be replaced.”
Medco spokesperson Jennifer Leone Luddy, disagrees. “This is geographically concentrated pilot-program that seems to be more of a pricing tactic than a game-changing business move,” Luddy says. “And just as their $4 generic program helped boost awareness and acceptance of the use of generic medications, we think this program adds validation to the advantages of using a mail-order pharmacy for chronic medications.”
Luddy advises managed care executives to look beyond unit price of a single drug product and consider the total value of a mail-order pharmacy benefit program, which can offer “the same-or better-generic pricing, more generic products, ensure consistency in the out-of-pocket costs for the consumer, and most importantly, offer enhanced, personalized clinical care.”
Brand drug costs, on average, comprise 85% of a Medco client’s spend, according to Luddy. “Therefore, managing just generics without brand considerations, and without a pharmacy with the scale to negotiate the best prices, places a client and their members at a significant disadvantage.”
In other Wal-Mart news, the retailer is rebuilding its walk-in medical clinic business, this time mostly in partnership with hospitals. At the end of 2008, Wal-Mart closed all but 17 of its 78 clinics.
The move by Wal-Mart comes as CVS is also elevating its in-store clinics, and reflects the big retailer’s desire to capture yet another chunk of the consumer’s spending budget, according to Joseph Paduda, principal, Health Strategy Associates LLC.
“The relationship with hospitals is a smart one; hospitals have the clinical, credentialing, and staff resources; Wal-Mart has the customers that hospitals want to turn into patients,” Paduda says. “There is minimal financial risk for Wal-Mart, and nothing but upside for hospitals.”
The re-entry of Wal-Mart into the retail clinic business is likely driven by several factors. “The company, and its hospital partners, recognize that some form of national healthcare reform is possible,” Paduda explains. “If that happens, many Wal-Mart customers who are currently uninsured will have coverage, and their care will be reimbursed-good news for hospitals and Wal-Mart alike.”
It is also possible that Wal-Mart is considering entering the direct contract business, wherein it would become the provider and “insurer” in a vertically integrated health plan model.
“This isn't as far-fetched as it sounds,” Paduda says. “By partnering with full-service hospitals, and with Wal-Mart’s expertise in supply chain management, data mining knowledge and strong brand, the company could become a major ‘health plan’ in its own right.”