CORRECT: Walgreen, Caterpillar In Prescription-Drug Pact

Walgreen Co. (WAG) will offer prescription drugs directly to Caterpillar Inc. (CAT) for its workers and retirees, launching a program that will parallel the one Wal-Mart Stores Inc. (WMT) already has with the heavy equipment manufacturer.

The Walgreen program announced Wednesday takes effect Jan. 1, when Wal-Mart's pilot with Caterpillar is scheduled to end. Caterpillar "has determined our pilot with Wal-Mart was a success" and has now signed a two-year contract with the retailer that also starts Jan. 1, said Caterpillar pharmacy benefits manager Todd Bisping. "We will have a direct agreement with both Walgreen and Wal-Mart," he said.

Caterpillar went with Walgreen because it wants to expand its health benefits programs to other pharmacies, said Bisping, who added that other pharmacy chains could be added.

The program will cover around 70,000 Caterpillar employees, retirees, and dependents.

A Wal-Mart spokesperson could not immediately be reached for comment. Wal-Mart started the prescription program with Caterpillar last September as a way of trying to define itself as a prescription supplier to corporations. Wal-Mart has said it want to expand the program, but has so far not announced any other companies have joined.

As part of its arrangement with Caterpillar, Walgreen will offer Caterpillar employees discounts on non-pharmacy goods. Walgreen and Caterpillar are also talking about expanding the program to have retail clinics onsite at certain Caterpillar offices or near them, Bisping said.

It's not believed Wal-Mart has either arrangement with Caterpillar currently. But services, as well as prescription prices, could change once the formal contract with Wal-Mart is announced. Right now, Caterpillar is picking up the copay for employees on generics from Wal-Mart. Employees pay full price, under their health plans, on brand drugs.

Walgreen operates about 7,000 pharmacies across the U.S., while Wal-Mart has much less.

- By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]