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Costco launches PBM

BY Alaric DeArment

NEW YORK — Costco has entered the pharmacy benefit management business, according to published reports.

In an article in the January 2013 issue of Costco Connection magazine, the club warehouse retailer is promoting the new PBM, Costco Health Solutions, to small business owners. Pharmaceutical industry consultant Adam Fein noted on his blog, Drug Channels, that Costco was seeking to emulate the tactics already used by CVS Caremark, Walgreens and Walmart to drive prescription growth.

"The Costco Pharmacy adheres to the same Costco philosophy as other areas of our business; we keep a tight rein on expenses, take lower markups and pass discounts and rebates from manufacturers to our members at time of purchase," the Costco Connection article quoted assistant VP Chris Pierce, who oversees the program, as saying.

In a note to investors on Thursday, Citi analyst Deborah Weinswig wrote that the retailer was offering Costco Business Prescription Insurance to employers with at least 50 employees who are self-funded, with EnvisionRx believed to be providing the back-end PBM infrastructure. Still, Weinswig wrote that she expects "little traction."

"We expect the Costco PBM offering will gain little traction as the employers at the size targeted by Costco are less likely to be self-funded and also are unlikely to be interested in managing another benefit plan for their employees," Weinswig wrote. "Our initial discussions with industry consultants indicate that Costco will not be successful pursuing the most attractive segments of PBM business — large and mid-sized employers. Costco would need to work with these consultants to go after larger clients as they remain the gatekeepers to this segment of the business."

Still, the Costco Connection article introducing CHS noted that the new PBM offers prescription drugs through Costco’s own pharmacies or a network of 64,000 independent pharmacies that have agreed to pre-negotiated prices, and Nippon Paper Industries USA, a 200-employer company in Port Angeles, Wash., had signed on to the program.

"The savings have been phenomenal," the article quoted Nippon Paper USA human resources manager Cathy Price as saying, noting that the company’s cost of pharmacy services had been reduced by 43% since it adopted CHS’ services. "It’s proven very valuable to us in our benefits program. I’d recommend it to anybody."

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R.HAMMERLE says:
Jan-21-2013 09:11 am

Ms. Weinswig is right. Costco's late coming, me too offering fails to provide distinctive services that their small business clients could genuinely use but which are not being offered by the larger, faster, bigger players in this field. If they really wanted to make a distinctive difference in medical cost management, they should consider a turbo charged version of programs similar to those they've done for car buyers or those who take cruises. Ron Hammerle Health Resources, Ltd. Tampa, Florida

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CVS Caremark issues statement on CMS action related to SilverScript

BY Antoinette Alexander

WOONSOCKET, R.I. — CVS Caremark has announced that it is working to resolve service issues related to its SilverScript Medicare Part D Prescription Drug Plan. 

Issues with SilverScript enrollment processing resulted from an enrollment system conversion and brought about an increase in call volume and issues related to claims processing, including, in some instances, not being able to have claims adjudicated at the pharmacy.  As a consequence, the Centers for Medicare and Medicaid Services has placed SilverScript on intermediate sanctions. Enrollment of any Medicare beneficiaries in the SilverScript plan and all marketing activities have been suspended. 

The CMS action does not affect current SilverScript members and these beneficiaries will continue to have access to covered services.  Existing employer group health plans are not affected by this action; CVS Caremark health plan clients are not affected by this action. The company estimates that the sanctions should not have a material impact on its 2013 earnings.

"We take these issues very seriously and are committed to working swiftly with CMS officials to address their areas of concern," stated Jon Roberts, president of the PBM business of CVS Caremark. "We also want to commit to members who experienced enrollment issues that we will resolve these expeditiously."


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CVS Caremark, UFCW announce cooperation agreement in 500 stores

BY Antoinette Alexander

WOONSOCKET, RI and WASHINGTON, D.C. — CVS Caremark and the United Food & Commercial Workers have announced that they have signed a cooperation agreement giving CVS/pharmacy employees at approximately 500 stores in the metropolitan Los Angeles, San Francisco, and San Diego areas the opportunity to vote on whether or not they want to be represented by the union.  

“This agreement is fair and reasonable for our employees and the company,” stated Larry Merlo, president and CEO of CVS Caremark. “It enables CVS Caremark to focus all of its energy and resources on our purpose of helping people on their path to better health.”

According to CVS Caremark and the UFCW, this Cooperation Agreement will help promote the success of the company and demonstrates the shared commitment of both parties to ensuring that employees have the right to choose whether to be represented by a union without pressure or undue influence.

The five-year agreement also establishes a quick and simple election process that allows workers to vote on whether or not to join the union.

There are more than 8,300 CVS/pharmacy employees who are currently UFCW members in 11 states and in the District of Columbia. In California, CVS recognized the workers’ union in about 100 former Sav-On stores following the company’s acquisition of those stores in 2006.  Under this new cooperative agreement, both parties have agreed to extend the existing collective bargaining agreement for other California CVS/pharmacy employees to incoming union members for the next five years.


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