Wal-Mart Taps Benefits Market, But It's Not Alone

(MoneyWatch)  The benefits enhancement program Wal-Mart has developed with Caterpillar Inc. will allow it to expand pharmacy operations and potentially drive more sales to its drug departments, but it is one of many retail initiatives established to capture more health-related sales.

Wal-Mart already is purchasing prescription drugs for Caterpillar, a job usually handled by pharmacy benefit management companies, and the retailer's involvement will certainly shake up that business. In a service extension of the deal with Wal-Mart, Caterpillar employees don't have to shell out the $5 co-payment when they purchase prescriptions from Walmart or Sam's Club pharmacies.

Wal-Mart initially used store pharmacies to expand its presence in health services. In September 2006, it launched a program offering 30-day supplies of 300 generic prescription drugs for $4, expanding the initiative a year later by adding medications for glaucoma, attention deficit disorder and fungal infections, among others. The program has been credited with driving sales at Wal-Mart, and the company said in last year's fourth quarter conference call, held in the aftermath of the generic drug program launch and expansion, that pharmacy had finished the year as one its strongest performing departments.

Yet, a number of retailers are providing discount drug and wellness programs, including health services to outside companies.

Naturally, drug chains have among the most extensive programs. Take Walgreens for example. The company operates Take Care clinics, which provide simple accident and illness treatment as well as preventative services at low cost. The company continues rolling them out to its stores, with 41opening in the latest completed quarter, but the majority of the 701 it operates are at worksites. In fact, Walgreens' Take Care Employer Solutions operates health centers that perform many of the same services at its retail clinics at about 370 corporate facilities across the United States.

Back in its stores, Walgreens recently expanded a Prescription Savings Club program that gives members a break on 5,000 generic and other pharmaceuticals, adding 90-day supplies of more 400 generic medications for $12. This list of generics in the 90-day discount plan includes commonly prescribed medications for pain relief, asthma, blood pressure, cholesterol, diabetes, women's health and more. In announcing its second quarter results, the company noted that its Prescription Savings Club had reached 1.7 million members.

Like Wal-Mart, other retailers are exploring opportunities involving benefits. In November, Meijer embarked on a program with 4D Pharmacy Management Systems, a service provider that supports corporate drug benefits programs. Companies that contract with 4D now can expand benefits available to their workers by signing up for Be Well, a joint venture with Meijer. The program provides discounts on products that promote healthy lifestyles including Meijer-label vitamins, minerals, supplements and organic food as well as some national brands, including Slim-Fast items. Be Well members also can take advantage of a Meijer program offering free antibiotics and pre-natal vitamins to customers.

Retailers realize that an aging population wants help with its medical costs, and they will continue to test how they can use their pharmacy operations, extensive store networks, buying power and service expertise to capitalize on that need.