Competition among pharmacies could spur change in industry

The competition among pharmacy retailers such as Walgreen and Wal-Mart "to create more efficient business plans for pricing and selling prescription drugs has the potential to spur change across the pharmacy industry," the Wall Street Journal reports.

Wal-Mart last month announced that it would expand to other companies a generic drug purchasing pilot program it currently runs with heavy-equipment maker Caterpillar. Under the program, Wal-Mart negotiated a fixed markup on prices for drugs that the company provides to Caterpillar's 70,000 workers and their dependents. Todd Bisping, manager of Caterpillar's drug benefits program, said the company was able to reduce prescription drug prices enough to waive the copayment for generic drugs purchased at Wal-Mart.

Walgreen has created a health care program that provides basic services, such as checkups at the chain's health centers and at larger employers, including Toyota. Walgreen operates at least six pharmacies at Toyota facilities nationwide and currently is in discussions with the carmaker to establish a program similar to the one between Wal-Mart and Caterpillar for Toyota employees. Walgreen executives say the company aims to provide a clearer pricing structure than pharmacy benefit managers.

Such moves follow other recent programs "by big pharmacy retailers to grab marketshare by offering companies a less expensive and simpler way to manage their drug plans," according to the Journal. The Journal reports that the competition of retail pharmacies "poses a direct challenge to the dominant role [PBMs] have played in the drug chain." For example, Wal-Mart says it also can negotiate lower drug prices because the company buys large quantities of medication, but the retailer says it passes more of the savings to its clients than PBMs (Zimmerman/Merrick, Wall Street Journal, 5/4).