Marketing Convenience

CVS manager Keisha Leak restocks the Medicare drug brochures at a CVS store in Southeast Washington.
CVS manager Keisha Leak restocks the Medicare drug brochures at a CVS store in Southeast Washington. (By Linda Davidson -- The Washington Post)
By Dina ElBoghdady
Washington Post Staff Writer
Saturday, November 12, 2005

With the first Medicare prescription plan opening for enrollment on Tuesday, drugstore chains eager to lure elderly customers have embarked on a marketing blitz aimed at people like Marie Williams of Elkridge.

Williams, who takes two medications regularly, says that every time she tries to learn about the Medicare plan that kicks in Jan. 1, she feels like a befuddled cook in an unfamiliar kitchen.

"It's like I'm trying to bake a cake but a few ingredients are missing from the recipe," said Williams, 74. "I can't find the answers I need."

Drugstore chains hope that if they can help seniors like Williams sort through the confusion, they will win over customers who are getting drug coverage for the first time -- boosting the amount of prescriptions they dispense and vastly expanding foot traffic in their stores.

To that end, Wal-Mart Stores Inc. rolled out a fleet of trailers to 200 stores across the country with representatives from the Humana insurance company on board for face-to-face chats with seniors. CVS Corp. hosted seminars at more than 500 senior centers nationwide. And this week, the pharmacy staff at all Walgreen Co. stores set up tables, passed out brochures and counseled seniors about various plans.

Fueling this marketing frenzy is Medicare's decision to offer prescription drug coverage to its 40 million elderly and disabled beneficiaries for the first time in its 40-year history. Enrollment ends May 15. The coverage would come from private companies that have contracted with Medicare, which picks up a large part of the cost.

In October, dozens of the companies began releasing details of their plans, leaving some seniors flummoxed by the array of options. In the Washington area, Medicare consumers have the choice of more than 40 prescription drug plans, with premiums ranging from $6.42 to $68.91 a month, according to the Kaiser Family Foundation. Deductibles and the drugs that are covered also vary from plan to plan.

It is no wonder seniors are confused. About 61 percent say they do not understand Medicare's drug benefit very well, if at all, according to a poll released this week by Kaiser and the Harvard School of Public Health. But they also said their pharmacists rank third, after the Medicare office and their doctors, as a source of help.

Similar research emboldened CVS -- which gets 71 percent of its sales from prescriptions -- to join the fray, said Jim Maritan, vice president of strategy and business development at CVS. "We decided we needed a plan."

The plan went well beyond education. CVS also struck a deal to have a subsidiary process claims for Universal American Financial Corp. Under the deal, CVS will determine which drugs Universal's plan should cover and handle mail orders.

For its services, the retailer will receive a fee, which it declined to disclose. But it will also bear half the risk, Maritan said. Universal submitted a bid to Medicare forecasting its total cost. If it overshoots the projected cost, the plan makes less money and so does CVS. If the plan makes more than expected, it gives some back to Medicare and keeps the rest, Maritan said.

"It's an interesting opportunity for Pharmacare," the CVS subsidiary, Maritan said. "It is essentially a way for us to bear limited risk and develop greater knowledge of how this population behaves."

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