General Motors (NYSE:GM) is taking no prisoners in its effort to keep its health-care bill in check, and woe to the retail pharmacy that stands in its way. The automaker's new aggressiveness could set a precedent with important implications for pharmacy benefit management companies and retail pharmacy operators.
Last week, GM informed its employees, retirees, and both groups' dependents that they will no longer be able to fill their prescriptions at Walgreen (NYSE:WAG) pharmacies. The automaker's move reportedly relates to Walgreen's policy to not fill prescriptions for those covered by plans with a mail-order drug requirement. As a cost-saving measure, GM has mandated that people under its health plan who need "maintenance medications," such as heart drugs, receive those treatments via mail-order services. Plan participants can still use a retail pharmacy for medicines taken as needed, such as antibiotics.
For its part, Walgreen claims that GM has misunderstood its stance. The retail pharmacy outfit indicated that it will still serve GM plan participants and that its no-mail-order position applies to new programs that require mail ordering, not existing plans like GM's. According to the Chicago Tribune, Walgreen believes that GM's pharmacy benefit manager, Medco Health Solutions (NYSE:MHS), has misinformed the automotive giant.
Although GM and Walgreen could still mend fences, the friction may be a sign of things to come, as automakers are exploring every option to reduce their prescription drug expenses and may follow GM's example. If more firms become convinced that they can save money by using mail-order programs such as those run by Medco and its rivals, Caremark Rx (NYSE:CMX) and Express Scripts (NASDAQ:ESRX), the future for pharmacy benefit managers looks bright indeed. By contrast, for retail pharmacies such as Walgreen, CVS (NYSE:CVS), and others, resistance to this trend may be futile.
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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.
