Wal-Mart Expands Pharmacy Benefits Management Efforts

May 4, 2009 (PLANSPONSOR.com) - Wal-Mart Stores Inc. is expanding its pilot prescription drug program for companies.

The Wall Street Journal reports that the company 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 third parties known as pharmacy-benefit managers.

Wal-Mart began a trial of its program in September with heavy-equipment maker Caterpillar Co., which provides prescription coverage for 70,000 employees and their dependents, the Journal noted. The retail giant negotiated a fixed markup over its cost for the drugs it sells to Caterpillar’s employees under Caterpillar’s in-house insurance.

Wal-Mart does not reveal the costs to Caterpillar, but they are verified by a third party. The markup guarantees a profit for Wal-Mart, while reducing the cost to Caterpillar, the news report explained.

Todd Bisping, who manages Caterpillar’s drug-benefits program, said the company was able to reduce its drug costs enough that it waived copayments on generic prescriptions bought from Wal-Mart, according to the Journal.

Efforts by Wal-Mart, Walgreen Co. (see  Walgreens to Launch ‘Employer-centric’ Health Care and Rx Service ) and others to create more-efficient business plans for pricing and selling prescription drugs presents a challenge to current pharmacy benefit managers and has the potential to change the industry.