Friday, September 4, 2009

Cutting out the middle man

Pharmaceutical Benefit Managers design and administer pharmaceutical services on behalf of employers and insurance companies.  They negotiate with upstream drug companies and with downstream retail pharmacies (some also use mail) to deliver drugs as efficiently as possible.  Now Caterpillar is managing its own pharmacy benefits program:
Caterpillar will negotiate pricing directly with Wal-Mart and Walgreen instead of paying a PBM to handle that part of the business. Savings will come through lower prescription drug costs for Caterpillar. ...
As part of its arrangement with Caterpillar, Walgreen will offer Caterpillar employees discounts on nonpharmacy goods. Walgreen and Caterpillar are also talking about expanding the program to provide health clinics at or near certain Caterpillar offices, Mr. Bisping said.

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