Middlemen shrug off Wal-Mart drug pricing

Published October 2, 2006

After Wal-Mart rolled out its $4-for-generics program in the Tampa Bay area last month, some wondered if pharmacy benefits managers - the middlemen who handle insurers' drug plans - would come under pressure.

"I think this is going to bring home to employers the fact they've been overpaying for generics for a long time," said Robert Garis, an associate professor of pharmacy at Creighton University in Omaha, Neb.

Not so, says Cigna Pharmacy Management, the PBM subsidiary of the big health insurer. In a memo to insurance brokers last week, Cigna's drug-pricing experts dismissed Wal-Mart's move as a mere marketing ploy. It claimed the average ingredient cost for the generics on Wal-Mart's list was $2.85 and Cigna gives employers a better deal on all but 17 percent of them.

The insurer admitted, however, that Wal-Mart's move may mean a savings for members who have forked over a $7 co-pay for the drugs in the past. And if members buy the generics through Cigna's mail-order service, they may pay more.

Overall, however, Cigna's memo concluded "there will be no major impact on their (employers') financial situation."

Garis, the pharmacy professor and PBM critic, is not surprised by Cigna's conclusion. "The resiliency of the PBM industry boggles my mind," he said. "I've never seen anyone spin things like they do."