ALEXANDRIA, Va. Details on Wal-Mart’s pending foray into the pharmacy benefit management industry are still sketchy, but the nation’s biggest advocate for independent pharmacy is already calling on the retail behemoth to use its influence to help reform the controversial PBM industry.
Wal-Mart chief executive officer Lee Scott revealed the company’s plan to offer its own PBM services to “select employers” earlier this week, roiling a managed-care industry already on the receiving end of much criticism over some of its operating practices, use of rebates, pricing transparency and other issues. Addressing Wal-Mart store managers in Kansas City, Scott said the plan would begin with a pilot program aimed at helping a few employer-based health programs manage their drug costs for employees.
An assault by the world’s largest retailer into the PBM arena could shake up an industry dominated by three major players: CVS Caremark, Medco Health Solutions and Express Scripts. Amid the uneasy and often fractious relationship between PBMs and community pharmacy, Wal-Mart’s plan to offer its own brand of pharmacy benefits to employers could also shift more of the balance of power toward the retail pharmacy side of the ledger.
That shift began when CVS purchased Caremark in 2006. It could really gather steam if Wal-Mart—now the nation’s third-largest pharmacy dispenser behind Walgreens and CVS—begins stalking employer-sponsored health plans in earnest for PBM contracts. What arguably makes retail pharmacy rivals most nervous about Wal-Mart’s plan is its potential to funnel prescription business directly into Wal-Mart’s pharmacies, via an exclusive provider contract between the company’s proposed PBM operation and an employer.
That possibility is clearly on the minds of rival pharmacy leaders. One of the first to respond to Scott’s announcement is Bruce Roberts, executive vice president and chief executive officer of the National Community Pharmacists Association. “Wal-Mart, a true corporate behemoth and the nation’s third largest pharmacy retailer, has decided to become players in the PBM industry,” he said today. “They will have a dramatic affect on whether positive or negative changes occur.”
However, NCPA’s top executive charged, “Wal-Mart’s track record in health care is not strong. Employees have questioned the health care benefits it provides. It has commoditized prescription medications by selling prescription medications below its cost. It has engaged in predatory pricing that has hurt small business healthcare providers.
Nevertheless, Roberts extended a peace pipe. ”Wal-Mart has the opportunity to provide a positive influence on the PBM marketplace. Its pockets are deep and its sheer size causes industries to take notice,” he said. “It can use its market influence to reshape the PBM industry to one that is transparent and truly seeks solutions that will benefit the patient.
“In the best interests of the consumer, NCPA challenges Wal-Mart to use [its] entry into the PBM marketplace to establish standards that provide transparency, exercise fiduciary responsibility on behalf of payers, and work with pharmacy to optimize the health benefits medications provide,” Roberts added. “We will be watching with great interest to see the course Wal-Mart chooses to take.”