Generic Prescription Drug Plan to Provide Pain Relief for Small Businesses

October 16, 2006; 02:43 AM

Small businesses are straining under the pressure of sharply rising health insurance costs, leading many employers to cut their employee coverage. To provide critical relief for smaller-sized companies, Medco Health Solutions, Inc. (NYSE:MHS) today announced the introduction of Generics First(TM), one of the nation's lowest cost generic prescription drug programs for small to mid-size businesses.

Generics First, an insured product available only through Medco's insurance partners via their licensed agents and brokers, is up to half the cost of traditional plans, with members receiving up to a 90-day supply of generic drugs for a $10 co-pay.

Medco is launching the Generics First product with Nationwide, a leader in insurance and financial services, who will be selling the product under the name Nationwide Select.

Many small businesses have seen their premiums rise as much as 50 percent over the past several years making health care costs the #1 issue they're facing, according to a recent study by the National Federation of Independent Business Trade Group. With the average generic drug costing approximately 70 percent less than its branded counterpart - and nearly 75 percent of all FDA approved drugs available in generic form - fully utilizing these lower-cost alternatives can mean the difference between a business providing an effective prescription drug plan for its employees or eliminating coverage altogether.

"The small and mid-size businesses are the backbone of the nation's economy, and to recruit and retain the best employees, they must provide health benefits," said John Driscoll, group president, insured markets, Medco. "Too often, however, these businesses must choose between investing in their business or their people - often resulting in either limited or no health care coverage. By utilizing the power of Medco's expertise in prescription drug management, we created a prescription drug plan that makes safe, affordable medications a reality for all employees."

Features of Medco's Generic First include:
-- An insured product that is up to 50% lower in cost than traditional plans
-- Low $10 generic co-payment for up to a 90-day supply through Medco's  mail-service pharmacies - coverage includes nearly 2,000 generic drugs
-- Coverage for brand and specialty drugs at discounted rates
-- Pharmacists available to members 24/7
-- Plan available to employees and their families
-- Expansive 55,000 national retail network

Small Businesses' Health Care Costs Soar

With limited negotiating power, small businesses often endure a disproportionate financial burden when it comes to the provision of health care benefits for their employees and dependents.

As a result of the high costs, some small firms elect to provide no coverage at all. According to the Kaiser Family Foundation, only 59 percent of small firms offered health benefits to their employees in 2005. This compares with 98 percent of large firms providing health benefits for the same time period.

Matching the Product with the Want and Need

Not only do employees want a health care plan, the majority of them want it even more than a raise. According to the 2005 Medco Monitor(TM), a yearly survey of over 1,000 individuals on health care trends, 58 percent of respondents starting a new job indicated that the most important benefit is participation in a health care plan. This far outpaced the second choice -- a $5,000 raise -- which only 14 percent selected.

"Employees have spoken, and health benefits are unequivocally at the top of their priority list," said Driscoll. "By capitalizing on the inherent savings of generics - and layering in cost-effective mail-order delivery - Generics First opens the door to employers not only to provide a coveted benefit, but also to take the necessary steps to ensure a healthy and productive workforce."

Taking Advantage of Generics

Prescription drug costs continue to escalate, with spending increasing from $40.3 billion in 2000 to $188.5 billion in 2004. However, taking advantage of widely available generics, which are required by the FDA to be equal in safety, quality, strength and dosage to their branded counterparts, is key to controlling costs.

Between 2005-2006, several generic blockbusters have come to market, including those for Allegra, Zithromax, Zocor and Zoloft. Beginning in 2007, major drugs such as Ambien, Paxil, Norvasc and Toprol XL are also expected to come off patent and open the way for generic substitutions.

According to Medco, drugs with total U.S. sales of $30-40 billion could lose patent protection between 2006-2008.

About Nationwide

Nationwide (www.nationwide.com), based in Columbus, Ohio, is one of the largest diversified insurance and financial services organizations in the world, with more than $157 billion in assets. Nationwide ranks #98 on the Fortune 100 list. The company provides a full range of insurance, financial and health management services. The Nationwide companies include the country's seventh-largest property/casualty, the fourth-largest homeowners, the sixth-largest auto insurance group, and the country's largest farm owners' insurer. Nationwide Life Insurance Company, the major subsidiary of Nationwide Financial, ranks 11th in assets according to A.M. Best.

About Medco

Medco Health Solutions, Inc. (www.medco.com) is the nation's leading pharmacy benefit manager based on its 2005 total net revenues of nearly $38 billion. Medco's prescription drug benefit programs are designed to drive down the cost of pharmacy health care for private and public employers, health plans, labor unions and government agencies of all sizes, and for individuals served by the Medicare Part D Prescription Drug Program. Medco's technologically advanced mail-order pharmacies and award-winning Internet pharmacy have been recognized for setting new industry benchmarks for pharmacy dispensing quality. Medco serves the needs of patients with complex conditions requiring sophisticated treatment through its specialty pharmacy operation, which became the nation's largest with the 2005 acquisition of Accredo Health, Incorporated. Medco is the highest-ranked pharmacy benefit manager on the 2006 Fortune 500 list.