NEW YORK (AP) – Media reports indicated drugstore chain Walgreen Co. is in talks about a plan to offer prescription drugs directly to employees of Delta Air Lines Inc.

Walgreen and Delta would not confirm any negotiations. The Deerfield, Ill., company is the largest U.S. drugstore chain. It sells prescription drugs directly to Caterpillar Inc. employees under an arrangement that appeared to be similar to Wednesday’s reported discussions.

Caterpillar employees, dependents, and retirees have the option to buy prescription drugs from Walgreen, which reduces drug benefit costs for the company. Walgreen also offers discounts on store merchandise in an effort to win new customers from the Caterpillar workers. A Walgreen spokeswoman confirmed the company is seeking similar deals, and said it sees interest from potential customers.

Delta, which is based in Atlanta, had 81,106 full time employees at the end of 2009.

It is not clear if Walgreen and Delta will do business. But Lazard Capital Markets analyst Tom Gallucci thinks similar deals will be made because these arrangements can save money for health plan sponsors and drive new business for drugstores.

In a note to clients, Gallucci said drug supply deals will be “narrowed” with incentives that encourage plan members to get their drugs from particular retailers. He added that sponsors can do this with their pharmacy benefit managers and don’t necessarily have to deal directly with drugstores to do it.

So far, he said, Walgreen has not been able to replicate the Caterpillar deal because it’s not always clear where the savings will come from. But Gallucci believes these kinds of deals make sense for both plan sponsors and for drugstores.

In midday trading, Walgreen shares rose 9 cents to $34.48 and Delta stock picked up 38 cents, or 3 percent, to $13.19.

Date: March 10, 2010
Source: Associated Press