Two-Buck Huck?

LOUISVILLE, Ky., and , BENTONVILLE, Ark. —Some say it cheapens patient care and reduces quality. The nation’s fourth-biggest pharmacy retailer and one of its top insurers are hoping it shifts a big chunk of business their way.

Clearly targeted to middle- and lower-income seniors in a distressed economy, the new, co-branded Humana Walmart-Preferred Rx Plan, introduced on Sept. 30, features steeply discounted premiums and co-pays. And if its appeal to Medicare beneficiaries’ pocketbooks is successful, it could have a similar, if less dramatic, impact on the price-oriented end of the pharmaceutical market as Walmart did when it rolled out its $4 generic drug pricing four years ago.

The most compelling lure offered by the Preferred Rx Plan is a low national monthly plan premium of $14.80. That’s less than half the average national monthly premium set by prescription drug plans serving Part D, Walmart and Humana officials asserted, and is the lowest national plan premium in 2011 for a stand-alone Medicare Part D plan premium offered in all 50 states and Washington, D.C., according to the Centers for Medicare and Medicaid Services.

Given the state of the economy, said John Agwunobi, president of Walmart’s health-and-wellness division, “this couldn’t be more timely.” It will give nearly 18 million Americans relying on Medicare for their prescriptions an affordable alternative, he added.

Those savings aside, the plan could shift a considerable chunk of the Medicare Part D prescription market to the world’s largest retailer and its more than 4,000 pharmacies. One key reason: it gives preferred status to Walmart’s own pharmacies, so Medicare beneficiaries who enroll in the plan will get low co-payments when they fill their prescriptions at a Walmart, Neighborhood Market or Sam’s Club pharmacy. In-store co-payments for those plan members will start as low as $2 for generic prescriptions at the company’s own pharmacies.

The new co-branded prescription drug plan can save a typical Medicare Part D beneficiary an estimated average of more than $450 in 2011 versus the average total costs for a Part D prescription drug plan in 2010, the two companies noted.

Agwunobi acknowledged that the move “is intended to grow our business.” It also cements a partnership with Humana that dates back to the inception of the Medicare Part D program in early 2006, when the two firms linked up to educate seniors about their options under Part D and provide pharmacy services through a co-branded prescription insurance card.

The new plan’s potential for wrestling market share away from Walmart’s competitors wasn’t lost on the independent drug store industry. The National Community Pharmacists Association quickly blasted the retail giant. The new prescription drug plan, NCPA asserted, “imposes higher co-payments on seniors who choose to continue using their trusted local, community pharmacy.”

“This is simply Walmart’s latest ‘loss leader,’ intended to bring more people through its doors at the expense of patient care and quality customer service,” NCPA president Joseph Harmison charged on Oct. 1. “Patients are being financially coerced to get their medications at Walmart stores, which make up less than 7% of all of the retail pharmacies in the United States.”

Additionally, he charged, patients in those stores have to put up with long waits and “assembly-line service,” particularly to take advantage of the retailer’s $4 generic drug offer. “By contrast, independent community pharmacies earned among the highest customer satisfaction scores of all pharmacies” in the most recent customer survey from J.D. Power and Associates, Harmison asserted.

Conversely, Walmart was rated the lowest among big-box operators, scoring a 769 Customer Satisfaction Index, according to the J.D. Power study—25 points below the mass merchant average.