Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.
By Lauren Flynn Kelly, Editor
September 21, 2012 Volume 13 Issue 18
As part of an ongoing effort to reach employers, Walgreen Co. is seeking to boost enrollment in its “new and improved” Prescription Savings Club by offering memberships to the discount program in bulk to small and mid-sized employers. The new business-to-business (B2B) product offers discounts on the card’s membership fee based on how many employees sign up. But enrollment in the program, which was launched for employers late last year, has been somewhat slow going, and a consultant warns that it’s difficult for retailers to gain traction with an offering that’s historically been aimed at consumers.
Walgreens’ discount pharmacy program was revamped earlier this year to include more than 700 “value-priced” generics — up from about 400 products offered before — and features savings tiers, with $10, $20 and $30 copays on a 90-day supply of those selected generics. Members who pay the $20 annual enrollment fee ($35 for families) also will receive discounts on several other in-store services, such as 10% off visits to Take Care clinics, 5% to 20% discounts on immunizations, and rebates on Walgreens’ brand front-end products. And smaller discounts are available on other generics and single-source brands. Walgreens plans to integrate the club with its new loyalty program, Balance Rewards, in the future.
Jay Bernstein, product manager at Walgreens, explains that the product is a good fit for small and mid-sized employers that may be looking for an alternative to prescription drug coverage as they determine whether they can afford the penalties imposed by health care reform. Beginning in 2014, certain employers with at least 50 full-time employees will be subject to a $2,000 penalty per employee if at least one worker receives a premium credit through a health insurance exchange. “For them, the Prescription Savings Club might be a really nice alternative, almost kind of to save face with their employees,” suggests Bernstein.
David Dross, managed pharmacy practice leader at Mercer, says he has not seen interest among his own mid-sized employer clients in a program like this, but that doesn’t mean there’s not a market for it. “There may be a need at some point in the future, particularly regarding exchanges, if people start to move away from providing plan sponsor coverage,” he observes. “However, I have to wonder, if plan sponsors are going to make the decision to exit, then they’re going to exit rather than support their employees with this kind of offering.”
“I always tell my sales team the Prescription Savings Club is not for everybody,” maintains Bernstein. “If you’re going into a large employer and they have coverage, they’re not going to want the Prescription Savings Club, quite frankly. It’s not a program for those who have insurance.” The product may, however, be ideal for large employers with part-time employees who do not have drug coverage, he asserts. Walgreens even included its own part-time employees in a pilot last November.
Of its 250,000 part-time and full-time employees throughout the country, Walgreens enrolled more than 80,000 workers in the pilot, although Bernstein estimates around 200,000 people are using it including family members. Results from that pilot are not yet available as it has not been a full year, he says. That discount program is separate from the employer’s drug benefit, which is managed by Catamaran Corp. through a pre-existing agreement with Catalyst Health Solutions, Inc. Catalyst acquired Walgreens’ PBM, Walgreens Health Initiatives, prior to merging with SXC Health Solutions Corp. to form Catamaran.
Program Could Supplement Full Coverage
For some, a program like the Prescription Savings Club is also “filling in the gap” between what a person is able to obtain through employer-sponsored drug coverage and what they actually want or need. “Even though we’re Walgreens and we control the drugs that we sell, we still have a formulary like others do and there are still things that end up on the third tier or may end up not being covered at all, so folks like me and folks that I’ve spoken to who are full timers are signing up for the club,” says Bernstein.
The fee structure is based on how many employees enroll in the program. The discount ranges from 5% for groups with between 500 and 2,500 enrollees to 25% for groups with 100,000 members or more. The employer has a choice of whether they want to pass that discounted enrollment fee onto the member, split it with the member or cover it in full. Bernstein adds that the company is looking to improve the discount structure as interest in the program grows.
Walgreens now has one client enrolled, fewer than half a dozen in the contract stage and two very large employers that are interested. Walgreens’ hope is that as plans get closer to the implementation of health care reform requirements, more groups will sign up. “As I’m going out and promoting the program, I’m probably getting at least two inquiries a week from my sales team and that’s been picking up quite a bit lately,” reports Bernstein.
The only difference between the B2B and business-to-consumer (B2C) offering is that Walgreens’ consumer customers are guaranteed to save at least their enrollment fee through the Prescription Savings Club, while B2B customers are not promised the savings guarantee.
“We feel that the Prescription Savings Club is the most comprehensive discount program out there. I don’t know of any other program that has the tiered discount structures,” adds Bernstein. “Target [Corp.], Wal-Mart [Stores, Inc.], the grocers, they all do the same thing. They have a list of 300-plus generics that they discount for $4, but that’s what it’s limited to.”
“There are a lot of different discount cards out there right now. Some are driven by pharmaceutical manufacturers, some by the retailers. Honestly, for lack of a better term, it’s kind of a noisy, confusing space,” observes Dross. “It’s really hard for any of the entities to get traction. Really, a lot of the activity that I’ve seen has been not in the B2B space but rather in B2C. I have not seen plan sponsors that I work with expressing interest in this, but part of that might be that they haven’t marketed it that much yet.”
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