Automakers Roll Out a SEMI

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Even among the most competitive rivals, sometimes it pays to cooperate. In this case, all participants stand to win from a new partnership among three automakers.

General Motors (NYSE: GM), Ford (NYSE: F), and DaimlerChrysler (NYSE: DCX) jointly announced on Wednesday that they are launching the Southeast Michigan e-Prescribing Initiative, or SEMI, to streamline the drug prescribing process. As part of the project, physicians will use computers or wireless devices to write and send prescriptions electronically to a pharmacy for filling.

SEMI's primary goal is to reduce prescribing errors and head off potentially harmful drug interactions. However, the group notes, e-prescribing has an added benefit. Pharmacy benefit manager Medco Health Solutions (NYSE: MHS), which is participating in the venture, has evidence that physicians who e-prescribe tend to increase their generic substitution rates by an average of more than 15% and their generic dispensing rates by more than 8%. With drug formularies on the same devices that physicians use to write prescriptions, doctors are more likely to see and choose generics.

Automakers, especially General Motors, have been particularly adamant about the need to curb health care costs. At the Detroit Regional Chamber's Mackinac Policy Conference last year, GM Chairman Richard Wagoner said he views rising health costs as a national crisis. His concerns are understandable: GM, the nation's largest private insurer, expects its health bill to jump 23% to $5.3 billion in 2005, according to The Detroit News. Prescription drug expenses alone are forecast to climb 15%, a growth rate that will have a major impact on bottom lines.

For now, SEMI is just a limited experiment. But, if successful, it will likely be rolled out across the country. The program is no magic bullet, but even a small improvement may be worth getting excited about.

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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.