Generic prescription drug plans offer...

Generic prescription drug plans offered by our competitors

Posted in the Walgreens Forum

Since: Mar 12

Location hidden

#1 Jun 20, 2012
Do all of the other retailers have the same restrictions that we do on joining the PSC - not according to Consumer Reports Magazine article from March 2011 ("The best deal around:$4 generics").

http://www.consumerreports.org/cro/magazine-a...

Since: Mar 12

Location hidden

#2 Jun 20, 2012
WALMART $4 Prescription Program

Just got off the phone will my local Walmart pharmacy. They do not have a "club" or "discount plan" that you have to join - just the $4 prescription program. In my state, there are no restrictions for people receiving government help for prescriptions or for Medicare Part D recipients.

Here is the text cut and pasted directly from the Walmart website -

"$4 Prescriptions: Choose from hundreds of generic drugs and over–the–counter medications.

$4 for 30–day supply,$10 for a 90–day supply.

Take advantage of the savings and convenience you expect from Walmart Pharmacy with $4 prescriptions and FREE Home Delivery options."
pharm

Providence, RI

#3 Jun 20, 2012
The reason we have an enrollment fee and Walmart does not is because of "usual and customary pricing".

For example our "usual" (aka cash) price on a medication might be $50. We bill insurances $50 and they get a predetermined % discount off that price and might pay us something like $25 dollars. Meanwhile, our Psc card pricing might only charge $5, but because it requires a buy-in, it is not the "usual" price. Overall, we make more money buy having the 2 pricing schemes (charging higher prices to 3rd parties but still having a lower cost option for every else).

Check your "plan pay" field in Ic+ for some plans in your area and compare it to Psc pricing. You'll see what I mean.

Walmart on the other hand, has a "usual" price of $4. This means they bill insurance plans for only the $4 and might get paid like $2. Overall, this brings in MUCH less $ for the company. Seeing as how Walmart operates its pharmacy as a marketing tool for the general store and not as a for-profit pharmacy (each pharmacy is budgeted to BREAK EVEN NOT MAKE PROFIT) they don't care about the lower pharmacy reimbursement because the increased store traffic
(they claim) more than makes up the difference.

This issue of two-tiered pricing is blocked by all government payers. They require that they be billed the lowest possible price. By excluding all government payers (aka Medicare and Medicaid) Walgreens can bill them the higher because the lower price is "not available".

This 2 tiered pricing structure is one of the major sticking points between 3rd parties and pharmacies (like cvs, walgreens or rite aid). The bigger the buy-in cost for the "discount plan" the greater the spread between "usual" pricing and the discount pricing is allowed, generating higher overall gross profit.

That is why they can't lower the cost of the pcs card and/or allow patients with government insurance to enroll.
pharm

Providence, RI

#4 Jun 20, 2012
This issue is also the major stocking point with the esi contract. They wanted to pay the discounted price base on our Psc pricing instead of "usual" pricing.

This is what they mean when they say "walgreens wants higher prices that are not in line with our pharmacies"
hopingfor the best

Milwaukee, WI

#5 Jun 20, 2012
pharm wrote:
The reason we have an enrollment fee and Walmart does not is because of "usual and customary pricing".
For example our "usual" (aka cash) price on a medication might be $50. We bill insurances $50 and they get a predetermined % discount off that price and might pay us something like $25 dollars. Meanwhile, our Psc card pricing might only charge $5, but because it requires a buy-in, it is not the "usual" price. Overall, we make more money buy having the 2 pricing schemes (charging higher prices to 3rd parties but still having a lower cost option for every else).
Check your "plan pay" field in Ic+ for some plans in your area and compare it to Psc pricing. You'll see what I mean.
Walmart on the other hand, has a "usual" price of $4. This means they bill insurance plans for only the $4 and might get paid like $2. Overall, this brings in MUCH less $ for the company. Seeing as how Walmart operates its pharmacy as a marketing tool for the general store and not as a for-profit pharmacy (each pharmacy is budgeted to BREAK EVEN NOT MAKE PROFIT) they don't care about the lower pharmacy reimbursement because the increased store traffic
(they claim) more than makes up the difference.
This issue of two-tiered pricing is blocked by all government payers. They require that they be billed the lowest possible price. By excluding all government payers (aka Medicare and Medicaid) Walgreens can bill them the higher because the lower price is "not available".
This 2 tiered pricing structure is one of the major sticking points between 3rd parties and pharmacies (like cvs, walgreens or rite aid). The bigger the buy-in cost for the "discount plan" the greater the spread between "usual" pricing and the discount pricing is allowed, generating higher overall gross profit.
That is why they can't lower the cost of the pcs card and/or allow patients with government insurance to enroll.
You are correct, but we also offer over 8,000 drugs that are discounted and not just generics, to my knowledge Walmart only has selected few generics most commonly prescribed, we also offer 10% back on card for any Wag brand that is bought.

Since: Mar 12

Location hidden

#6 Jun 21, 2012
pharm wrote:
The reason we have an enrollment fee and Walmart does not is because of "usual and customary pricing".
For example our "usual" (aka cash) price on a medication might be $50. We bill insurances $50 and they get a predetermined % discount off that price and might pay us something like $25 dollars. Meanwhile, our Psc card pricing might only charge $5, but because it requires a buy-in, it is not the "usual" price. Overall, we make more money buy having the 2 pricing schemes (charging higher prices to 3rd parties but still having a lower cost option for every else).
Check your "plan pay" field in Ic+ for some plans in your area and compare it to Psc pricing. You'll see what I mean.
Walmart on the other hand, has a "usual" price of $4. This means they bill insurance plans for only the $4 and might get paid like $2. Overall, this brings in MUCH less $ for the company. Seeing as how Walmart operates its pharmacy as a marketing tool for the general store and not as a for-profit pharmacy (each pharmacy is budgeted to BREAK EVEN NOT MAKE PROFIT) they don't care about the lower pharmacy reimbursement because the increased store traffic
(they claim) more than makes up the difference.
This issue of two-tiered pricing is blocked by all government payers. They require that they be billed the lowest possible price. By excluding all government payers (aka Medicare and Medicaid) Walgreens can bill them the higher because the lower price is "not available".
This 2 tiered pricing structure is one of the major sticking points between 3rd parties and pharmacies (like cvs, walgreens or rite aid). The bigger the buy-in cost for the "discount plan" the greater the spread between "usual" pricing and the discount pricing is allowed, generating higher overall gross profit.
That is why they can't lower the cost of the pcs card and/or allow patients with government insurance to enroll.
I get it but I don't agree with it. I would like to have Wasson stand at the drive-thru and explain this to my customer especially since I spent 6 months last year telling my customers that "Express Scripts was taking away their choice" after Walgreens walked away from ESI negotiations a year ago.

My customers think the PSC card is smoke and mirrors. However, some of them are willing to spend a nominal amount on the PSC card to have the luxury of coming into Walgreens or picking up their medications through the drive-thru. If we had a $5 promotion last spring, we could do it again.

What we could do is offer the PSC card at a promotional price to the insurance copanies. If they get the customer to pick up the cost of medication instead of having the PBM pay for it, the insurance company would save money. And the prescriptions would still be on file with Walgreens so pharmacists could see a complete medication profile.

I think our day of reckoning on this issue is coming. If we save them money on prescriptions, maybe they would decide to splurge on the Boots lines in our stores.

Since: Mar 12

Location hidden

#7 Jun 21, 2012
pharm wrote:
This issue is also the major stocking point with the esi contract. They wanted to pay the discounted price base on our Psc pricing instead of "usual" pricing.
This is what they mean when they say "walgreens wants higher prices that are not in line with our pharmacies"
So this statement "walgreens wants higher prices that are not in line with our pharmacies" has to do with our PSC plan? First time I have heard this. I don't remember seeing it in the media anywhere - and I was reading everything I could find on the internet.

I am sure that Express Scripts is telling EVERY single PBM customer about their issue with our PSC pricing and that ESI does NOT have this issue with other retailers.

Let's just see how the PBM selling season turns out.

Since: Mar 12

Location hidden

#8 Jun 21, 2012
pharm wrote:
This issue is also the major stocking point with the esi contract. They wanted to pay the discounted price base on our Psc pricing instead of "usual" pricing.
This is what they mean when they say "walgreens wants higher prices that are not in line with our pharmacies"
From page 2 of Q&A from Walgreens Q3 2012 Earnings Call Transcript

http://www.morningstar.com/earnings/earnings-...

Wade D. Miquelon - CFO: Well, I think what you have to do is to understand the model and make sure that you get into the generic versus branded mix. So, the sales as you know both domestically and overseas are in this number for value creation.

So, for example, as you know our generics are much more profitable in U.S., that will create some sales compression, but we fully anticipate to drive robust volumes overseas in places like Europe, where generics are underpenetrated.

They obviously are at lower costs too, but they are more profitable from a pennies per unit basis in wholesaling, et cetera. So, I think that it's very difficult for you try to imply, well at least to back into what the unit volume growth is we're anticipating.
pharm

Ashburn, VA

#9 Jun 21, 2012
wagslavefornow wrote:
<quoted text>So this statement "walgreens wants higher prices that are not in line with our pharmacies" has to do with our PSC plan? First time I have heard this. I don't remember seeing it in the media anywhere - and I was reading everything I could find on the internet.

I am sure that Express Scripts is telling EVERY single PBM customer about their issue with our PSC pricing and that ESI does NOT have this issue with other retailers.

Let's just see how the PBM selling season turns out.
Their problem isn't with program in-and-of-itself per-say, but with the higher price Walgreens is charging third parties in general They want Walgreens to charge them a lower price as a "usual" price similar to the way Walmart has lowered their "usual" price.

Since: Mar 12

Location hidden

#10 Jun 21, 2012
pharm wrote:
<quoted text>
Their problem isn't with program in-and-of-itself per-say, but with the higher price Walgreens is charging third parties in general They want Walgreens to charge them a lower price as a "usual" price similar to the way Walmart has lowered their "usual" price.
The text below is taken directly from the article "Walgreens’$4.33 Surrender to Wal-Mart" (dated June 25, 2008).

Notice that the article is from almost four years ago. Walgreens changed their position between October 2006 and June 2008.

http://www.drugchannels.net/2008/06/walgreens...

----------

WALGREENS REACTS

Like many people, I’ve believed for some time that chains such as CVS Corp (CVS) or Walgreens (WAG) were not especially vulnerable to Wal-Mart’s (WMT)$4 generic program because customers with third-party insurance do not save much versus standard co-pays. Walgreens was so confident in its own business model that it issued this Statement On Wal-Mart’s Promotional Drug Pricing in

October 2006:

“Walgreens will not match Wal-Mart’s promotion. Once consumers learn the fine print of Wal-Mart's program, they'll realize Walgreens offers the best value for pharmacy patients with its convenient locations, close-in parking and unique pharmacy services.”

But on Monday’s earnings call, Walgreen President Gregory Wasson recanted, stating:“Discount retailers and grocery chains are picking up their pace of promotional pricing, especially in the pharmacy, which they’re using to build traffic.” Hence the emphasis on the new savings card, albeit with the requisite positive spin about convenience, service, brand, yada yada yada.
Overall, Walgreens still looks like a very strong company. The convenience factor is surely higher than Wal-Mart for most consumers. But I wonder whether Walgreens is throwing in the towel too soon simply because we are in a generic drug lull. I also note that Walgreens is aggressively (and sensibly) diversifying away from its core retail pharmacy roots.

Unfortunately, it’s very difficult to assess the true impact of $4 generics because Walgreens provides almost no public disclosure about its generic volume and margins.(Pet peeve: Despite representing 70%+ of pharmacy revenues, pharmacy chains mysteriously still consider financial data about the retail prescription business to be “not material.” Yeah, right.)

COMPETITION IS EVEN WORSE THAN AMP

Most pharmacists have been fretting about reduced generic margins for Medicaid scripts if the Average Manufacturer Price (AMP) rule ever gets implemented (and cheering every legislative victory.) But Walgreens' move signals that competition among pharmacies is now removing generic margin dollars from drug channels much faster than AMP. I suspect that Pharmacy Benefit Managers (PBMs) will be worried by Walgreens decision, too.

I have been trying to warn pharmacists for the past year that AMP is NOT the single biggest threat to the survival of independent pharmacies or to generic script margins. The pharmacy shakeout is coming, but don’t put all the blame on CMS.

Since: May 12

Location hidden

#11 Jun 22, 2012
I didnt' know all this. Reading Pharms comments, it seems to me that if we are getting customers to pay the $4 directly to us instead of billing it to insurance and maybe getting $2, we are getting the whole $4 and the enrollment fee price. Of course we make more money with the two tier pricing - duh. Even the customers know that. Selling them the PSC card highlights the fact that we have been making more from billing insurance and making customers pay copay for months. Just the facts.

Cvs has a special extracare card for tufts customers, it even says tufts on the card and extracare, they can still put it on their keyring like the regular card, customers get 20% off cvs brand items that are regular price and all the other extracare stuff, card is called the extracare health care. They get in in the mail straight from tufts along with a letter, don't remember what the letter says anymore.

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