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¶ … Forbes Magazine entitled, "In the Pill Box" discusses Walgreen's Drugstore and the challenge that it faces from Pharmacy Benefit Managers (PBM). The article begins by informing the reader of the astronomical growth of the Walgreen's company. The author explains that the company's stock has risen by 3,000% in the past 20 years and that the store plans to have over 7,000 stores by 2010. (Lambert) The article also asserts that the same-store sales increased by 9% in fiscal 2003. (Lambert)
The author contends that although the company is extremely success, there is a threat on the horizon. This threat comes in the form of Pharmacy Benefit Managers who show health organizations and employers how to make prescriptions drugs more cost effective. The article explains that PBM's often encourage these organizations to persuade patients to get long-term prescriptions through the mail instead of going to a pharmacy. Mail order pharmaceuticals are becoming more and more popular with consumers. However Walgreen's fears that this practice will begin to affect their pharmaceutical sales which accounted for 62% of the company's revenues in 2003. (Lambert) Walgreen's fears that if the trend continues their business strategy could be greatly compromised.
The article contends that the power that PBM's have stems...
These relationships started in the 1970's as the PBM's would perform claims adjudication for insurers and pharmacies. Overtime the PBM's started to perform other tasks such as; negotiating drug prices, devising health plans for employers and insurers and operating mail-order stores. (Lambert) They were also responsible for setting up groups of pharmacies (networks). (Lambert)
Although Walgreen's is firmly against mail order prescriptions, the company actually started a PBM in 1995 called Walgreen's Health Initiative. (Lambert) This initiative was created in an effort to combat some of the ill effects that Walgreen's felt would develop if Walgreen's didn't create their own PBM. Although this segment of the company's business only accounts for a small percentage of overall revenues, the mail order segment of the company is growing faster than any other sector. (Lambert)
The article explains that many PBM's have been successful at persuading their clients that mail order is less costly than filling prescription in the traditional way. However, Walgreen's has pointed to a study performed by the economist Robert Maness and law professor James Langenfeld, which found that ordering prescriptions…
At the other end of the debate there are consumers who like to order their prescriptions through the mail. Some consumers do this even if it is not mandated by their insurance providers. In many cases consumers just find it more convenient to order prescriptions through the mail. In any case, the PBM's and the drugstores will continue to quarrel over which method is less expensive.
In my own opinion, it seems that Walgreen's should not have the right or ability to blacklist customers because of the decisions that are made by their healthcare providers. In many cases people are in dire need of receiving their medication and may not have time to ride around to different pharmacies just to get a prescription fulfilled. It is apparent to me that all Walgreen's is concerned with is its bottom line and they are willing to sacrifice the health of customers just to prove a point to PBM's. The fact of the matter is that consumers have a right to purchase prescriptions in any way that they see fit. Some people prefer going to a traditional pharmacists, while other prefer for the prescriptions to be brought to their homes. Walgreen's has to be careful not to ignore the needs and desires of consumers in the quest for greater profits.
Lambert, Emily. 2004. "In The Pill Box." Forbes Magazine
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