In a speech Wednesday before 7,000 Wal-Mart store managers at a meeting in Kansas City, Mo., Chief Executive Lee Scott said Wal-Mart is initiating a pilot program to help "select employers ... manage how they process and pay prescription claims."
Pharmacy-benefit managers, or PBMs, are the companies behind the cards that insured patients present at drugstores in order to fill their prescriptions. Most U.S. employers contract with PBMs to provide prescription drug coverage to their workers, and in exchange, the PBMs promise to negotiate lower prices from retail pharmacies and obtain rebates from drug manufacturers. PBMs also own their own mail-order pharmacies, and increasingly make much of their profits from big mark-ups on generic drugs. A record number of blockbuster drugs are going generic, fueling strong profits and rising revenues among the PBMs.
CVS Caremark Corp. (CVS) is expected to report revenue of $76.13 billion for 2007, while Medco Health Solutions Inc. (MHS) is expected to post revenue of $44.7 billion and Express Scripts Inc. (ESRX) $18.4 billion, according to Morgan Stanley. Combined, the three companies processed or filled 387 million prescriptions in the third quarter of 2007.
Wal-Mart could take a chunk of that.
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