Walgreens 2005 Annual Report Download - page 15

Walgreens Health Initiatives (WHI), our pharmacy
benefit management (PBM) division, has teamed
with Ovations, the senior healthcare business unit
of UnitedHealth Group. The partnership was created
to handle the new prescription insurance business that
will be spurred by the Medicare Modernization Act’s
Part D prescription drug benefit starting in January 2006.
Ovations provides healthcare services for
nearly five million individuals already, and its recent
agreement with AARP to offer an AARP-branded
Medicare drug plan should enhance our partnership’s
success. In addition to Ovations, we’ll be the PBM
for another major insurance provider, WellCare.
Walgreens Health Initiatives controlled client drug costs
better than other leading PBMs
Ovations was attracted to Walgreens for our strong
brand name, consumer focus and industry leadership.
Walgreens also has a reputation for saving PBM clients
money due in large part to the promotion of generic
drugs. To prepare for the business created by Medicare
Part D, WHI is ramping up personnel to manage
formularies, process insurance claims and handle
patient calls. According to Greg Wasson, the head
of Walgreens managed care division, “Medicare ’06
presents the greatest change in prescription coverage in
our lifetime. It’s not just a new prescription drug plan
for seniors. The new law will affect the way prescriptions
are delivered, drugs are priced and pharmacy services
for seniors are provided.”
As WHI prepares to handle this change, store
pharmacy staffs are educating seniors about the new
plans through presentations, brochures and counseling.
For nine days in October and November, trained staff
were available in every Walgreen store chainwide to
assist seniors and their caregivers.
We’re a valuable resource for seniors, but we
also expect our efforts to
attract new business. The
majority of seniors who
pay cash for prescriptions
currently buy their
medication at deep
discounters that can
price drugs lower because
the category represents
a small percent of their
business. In contrast, prescriptions
are approximately two-thirds of
total sales volume at drugstores.
But with Medicare prescription
insurance, cost is no longer a
major consideration. Once
participating seniors choose a
plan, their co-pay for medications
will be the same at any retailer
in their network. We believe
many will be drawn to Walgreens
neighborhood convenience and
services such as drive-thru pharmacies
and large-type prescription instructions.
Ovations chose Walgreens Health Initiatives to be its
pharmacy benefits manager for the new Medicare drug plan.
Walgreens Health Initiatives
Number of lives covered in millions
2005 Annual Report 13
Sales clerk Tom McFadden
in Elkhart, Indiana, chose
Walgreens for his second
career after 31 years in the
military. To help seniors find
jobs, Walgreens is a featured
employer of an AARP program
that allows us to tap into
the association’s pool of
members interested in going
back to work.
Serving managed care clients
Walgreens Health Services operates Walgreens Health
Initiatives – a pharmacy benefits manager – and serves
patients, prescription drug plans and medical plans across
the country with Walgreens Mail Service, Walgreens Home
Care and Walgreens Specialty Pharmacy.