Retail pharmacies fill 90-day prescriptions to compete with mail

Are pharmacy benefits managers (PBMs) that rely on revenue-generating mail-order prescription service going to get a run for their money as 90-day retail programs hit the marketplace? Walgreen Health Initiatives (WHI), a PBM headquartered in Deerfield, Ill., is not particularly bothered by the new retail product. WHI launched Advantage90, a 90-day retail fulfillment program, in late 2003 with more than 26,000 pharmacies nationwide now participating in the program.

According to the company, the average retail prescription filled under Advantage90 over a 12-month period was more than $10 less than 90-day fills by mail order. The overall benefit to plans was a 2% reduction in their prescription costs, resulting in a savings of almost $9 per member per year.

"Plans with both a 90-day option at retail and by mail can save more than if they use mandated mail order exclusively," says Michael Polzin, a spokesman for Walgreen Co. "Patients want choice; they don't want to be forced into mail order."

David Williams, co-founder of MedPharma Partners in Boston, a healthcare management consulting firm, says that payers are realizing that customers want more choice, in line with the move toward consumer-driven healthcare.

"People tend to go to a pharmacy anyway, where they have the trust of their local pharmacist," he says. "If they are taking complicated therapies, they feel more comfortable face-to-face. Ninety-day retail is long overdue. There is no reason why consumers cannot purchase medications where they want."

He also sees 90-day retail as forcing mail service to become more consumer-oriented and as a means of driving down prices as competition heats up.

Although pharmacists may not welcome the 90-day retail programs and their lower reimbursement rates with open arms, it beats losing customers to mail order even if they only visit the pharmacy once for a 90-day script instead of three times. Polzin says that while pharmacies may be taking a hit in reimbursement, they can save money in dispensing fees.

Dale Brown, president of MedImpact, a San Diego-based PBM, agrees with Polzin that a 90-day retail option is acceptable to retailers even though reimbursement rates are lower-to remain competitive with mail service-because pharmacies would rather have 90-day fills than lose the business to mail. MedImpact inaugurated Choice90Rx in late 2003, a 90-day retail program similar to WHI's. All of the independent and chain retail pharmacies in the PBM's network are participating-numbering 35,000-and 50% of MedImpact's clients are offering Choice90Rx.

"Pharmacies know that without Choice90Rx, payers would be unable to benefit from lower 90-day fill rates and would be more inclined to move to mandatory mail as a cost-saving strategy," Brown says. He has no doubt that 90-day retail has taken off, delivering choice and empowering consumers.

MedImpact, as most PBMs do, works with payers to determine the best copayment design for 90-day fulfillment. Brown says the equivalent of 2 or 2.5 copayments for a 90-day fill have proved most successful. He notes that sometimes the payer will elect to set the copayment for 90-day fills at retail at a slightly higher rate than for 90-day mail service because even if it is higher, it is still lower than the copayment for three 30-day fills.

"Many members are willing to pay slightly more because the retail option gives them the opportunity for face-to-face interaction with their local pharmacists," Brown says. "Since we don't sell drugs, retailers don't think we are trying to pull sales away from retail to mail," says Brown, explaining one of the reasons pharmacies in the PBM's network have reacted positively to the product. MedImpact will soon offer Choice60 to its clients, and Brown expects plan sponsors to set copayments equal to two 30-day copayments.

"It's a win-win-win situation for patients, pharmacies and payers-decreasing out-of-pocket patient costs, enabling retailers to compete with mail order and reducing 30-day fills for the payer," Brown says.