PBMs, clinical care capture bigger role in industry’s future

How serious are major retail pharmacy chains about expanding opportunities in pharmacy benefit management and other health care initiatives? Consider this: the pharmacy benefit management companies owned by two retail pharmacy chains, Walgreen Co. and Rite Aid, scored highest among PBMs in a recent Boehringer Ingelheim Pharmaceuticals, Inc. 2007 Customer Satisfaction Digest, based on the Wilson Rx survey.

Survey respondents named Walgreens Health Initiatives the nation’s highest-ranking pharmacy benefit manager in overall member satisfaction among the 18 major PBMs evaluated in the 2007 WilsonRx PBM Member Satisfaction Survey. And for the second consecutive year, Rite Aid Health Solutions was rated No. 1 based upon Wilson’s PBM satisfaction index.

Clearly, companies like CVS, Walgreens and Rite Aid now see themselves in broader terms as health care specialists.

With its purchase in March of Care-mark, CVS vaulted itself into the top ranks of pharmacy managed care, with $37 billion in annual PBM revenues. Rather than simply referring to its business as drug store retailing, CVS Caremark now calls itself “the nation’s premier integrated pharmacy services provider, combining one of the nation’s leading pharmaceutical services companies with the country’s largest pharmacy chain.”

Caremark operates a national retail pharmacy network with more than 60,000 participating pharmacies, as well as 11 mail service pharmacies. It also operates more than 70 specialty pharmacies, which have been accredited by the Joint Commission on Accreditation of Healthcare Organizations. Its disease management programs have also been accredited by the National Committee for Quality Assurance, according to the company.

“CVS Caremark will offer end-to-end services, from plan design to prescription fulfillment, as well as the opportunity to improve clinical outcomes, which will result in better control over health care costs for employers and plan providers,” the company reports. “We will improve the delivery of pharmacy services and health care decision-making, enabling consumers to benefit from unparalleled access, greater convenience and more choice. And together we will deliver unique products and services that are responsive to the needs of employers, health plans and consumers, and do it in more convenient and flexible ways that allows consumers to take more control of their health care needs.”

Walgreens, for its part, offers a menu of health services through its managed care division, Walgreens Health Services, including:

The Walgreens Health Initiatives pharmacy benefit management operation;

Walgreens Mail Service, which can fill more than 26 million prescriptions a year;

Walgreens Specialty Pharmacy, the fast-growing provider of individualized care for patients with complex conditions like HIV/AIDS, hepatitis C, infertility, multiple sclerosis and transplant rejection;

Walgreens Home Care, which provides home infusion and respiratory services as well as durable medical equipment and related supplies.

In a visit with Walgreens’ top executives earlier this year, retail analyst Meredith Adler reported, “Management stressed that it would continue to expand the health care services it offers through WHI, which include pharmacy benefit management, specialty, and home health services. It has no interest in acquiring a large PBM, but does believe it is valuable to be in the PBM business. Its focus remains the small-employer end of the market.”

Greg Wasson, who ran Walgreens’ managed-care subsidiary before being named company president earlier this year, described Walgreens Health Services as “a complementary business to our…stores.

“For example…our pharmacy benefits manager [Walgreens Health Initiatives] introduced Advantage90, a 90-day retail prescription service that offers plan members the option of going to their neighborhood drug store to fill 90-day prescriptions for chronic diseases.”

That move, he added, “has proved popular with our PBM clients and their members, especially because we have shown cost savings through this service.”

Walgreens’ growing foray into in-store walk-in clinics is part and parcel of its broadened health care focus. According to NACDS economist Laura Miller, the move by drug retailers into in-store clinics “opens the door for a broader array of health care services.”

Don Huonker, Walgreens’ senior vice president of pharmacy services, noted, “That’s been our logic with Walgreens Health Services.

“Our goal is to serve the whole life cycle of a patient,” said Huonker. “We have mail service, home care, specialty pharmacy and services for assisted living facilities. We’re moving toward a total health care package.”

Along those lines, Walgreens Health Services is acquiring “best of breed” specialty pharmacy businesses and merging them with its Walgreens Specialty Pharmacy division. Recent acquisitions include two more centers that offer specialized drug therapy: Bradley’s Center Pharmacy and OneFannin Pharmacy, both located in Houston, moving the company firmly into the field of fertility therapy, including the dispensing of reproductive medications, hormone replacement therapy and prescription compounding.

Other recent additions to WHS and its specialty operations include Farmington, Conn.-based Familymeds Group, a 53-store pharmacy and medical specialty product provider; and Pittsburgh-based Medmark Specialty Pharmacy Solutions, a national provider of injectables, infusibles and advanced oral medications to patients with unique or chronic medication needs for conditions such as hepatitis, multiple sclerosis, HIV, infertility, hemophilia, organ transplants and cancer.

“As the company weighs the pros and cons of the CVS-Caremark merger, management believes that Walgreens’ clear focus on being a health care provider will crystallize its position in the minds of payors,” opined Citibank investment analyst Deborah Weinswig in a recent report.