Walgreens mines deal with Caterpillar
DEERFIELD, Ill. —Aggressively extending its reach into the business of providing pharmacy and health services directly to employers and their health plan members, Walgreens struck an agreement in late August to offer transparent prescription drug pricing to Caterpillar Inc., the world’s largest manufacturer of construction and mining equipment. The two companies also agreed to explore, through Walgreens’ Complete Care and Well-Being program, additional ways to extend integrated healthcare and pharmacy services to Caterpillar employees.
The agreement gives the heavy-equipment maker access to Walgreens’ Pharmacy Management Excellence program, which provides transparent prescription-drug pricing to employers who offer prescription benefits to their employees, dependents and retirees. Caterpillar will be given a Walgreens proprietary price list displaying the cost Walgreens pays drug manufacturers.
Separately, Walgreens said it also will provide Caterpillar health plan members a “significant” discount on all Walgreens branded and non-branded products. Both the transparent pricing and discount programs will be effective Jan. 1, 2010.
Todd Bisping, Caterpillar’s director of pharmacy benefits, praised Walgreens “for developing and embracing a transparent-cost, pharmacy-pricing methodology. Transparency around pharmacy pricing, elimination of unnecessary and hidden costs in the prescription-drug supply chain and the opportunity to effectively deliver lower-cost solutions are in great demand by the employer community,” he added.
For Walgreens, the biggest impact of the deal may be long-term—in its increasing ability to reach directly the major employers that fund the health and prescription benefit plans for a majority of Americans. The company’s Complete Care and Well-Being division, offered through Walgreens’ health-and-wellness division’s Take Care Health Systems business, is a major Walgreens initiative launched early this year to provide “a holistic approach to health care that integrates pharmacy and health-and-wellness services, with all prices transparent to the employer,” the company noted. “The program combines worksite health centers, in-store clinics and pharmacies with the discount prescription drug offering that is available nationally to a company’s employees, dependents and retirees no matter where they work or live,” noted the company.
Hal Rosenbluth, Walgreens SVP and president of its health-and-wellness division, expressed delight at the partnership between the two industry giants. “We believe Walgreens’ Complete Care and Well-Being program, of which Pharmacy Management Excellence is a key component, makes the historically conflicting goals of delivering quality care while managing costs complementary and achievable,” he noted.
Health industry expert Josh Bellamy also praised the move as another bold step by private industry to jump-start healthcare reform in advance of any government overhaul. “Directly aligning pharmacies and plan sponsors enables both parties to accomplish their economic goals without sacrificing the quality of pharmacy services,” said Bellamy, who is resident and CEO of HealthStrategy, a business services and consulting firm. “This unique approach is the solution corporate America has been looking for, as it not only saves companies money, but it also removes the ambiguity often associated with drug pricing.
“The complexity of the system and lack of incentive for pharmacies to exchange margin for volume are cause for companies, their employees and dependents to pay higher prices for prescription drugs,” Bellamy added. “It should also be noted that when the pharmacy benefit manager passes on all dollars between its pharmacy network and the employer, a program such as this can be implemented without disrupting the economics of their relationship.”
The contract with Walgreens isn’t the first time Caterpillar has bypassed its managed-care providers and pharmacy benefit managers to provide a more cost-effective health benefit directly to its more than 70,000 employees, retirees and their dependents. Previously, the firm struck a direct-pricing contract with Walmart Stores, under which the discount store giant’s more than 3,600 pharmacies fill most commonly prescribed generic drugs for those employees and dependents at no charge.
Walmart representative Christi Davis Gallagher told Drug Store News the agreement between Caterpillar and Walgreens “does not change any existing programs that Walmart currently has with Caterpillar.”
“In fact, we are very pleased with the success of the program that we launched with Caterpillar last year, and we believe it is this success that has allowed Caterpillar to continue seeking other ways to drive out unnecessary costs from their healthcare spend,” Gallagher noted Sept. 1. “No one company or one organization can carry the burden of lowering America’s healthcare costs, so we applaud other organizations, like Caterpillar, and other retailers who join us in our efforts to lower healthcare costs.”
Caterpillar spokeswoman Bridget Young also characterized the Walmart partnership as a success. “As a result, when the pilot expires on Dec. 31, we will have a new two-year agreement in place with Walmart effective Jan. 1, 2010,” Young told Drug Store News.