Caterpillar in prescription drug trial with Wal-Mart

By Nicole Maestri

NEW YORK, Sept 24 (Reuters) - Wal-Mart Stores Inc (WMT.N) will fill certain generic drugs for free as part of a pilot program being offered to more than 70,000 Caterpillar Inc (CAT.N) employees, retirees and their spouses and dependents.

The agreement, which a Caterpillar official said was the first of its kind, is the latest step in Wal-Mart's efforts to extend its reach into the prescription drug business.

"What we've done with Wal-Mart is we've negotiated a direct (prescription drug) pricing contract with them, and that pricing contract overrides any other contract that we have through our pharmacy benefits manager," said Todd Bisping, Caterpillar's pharmacy manager, said on Wednesday.

Many companies, including Caterpillar, contract with pharmacy benefits managers that negotiate prescription drug prices with vendors.

But by bargaining directly with Wal-Mart, Caterpillar saved enough money that eligible employees who sign up for the program will not have to pay a co-payment to fill prescriptions for roughly 2,500 generic drugs, Bisping said.

Earlier this year, Wal-Mart Chief Executive Officer Lee Scott signaled his interest in working with U.S. employers to help them manage how they process and pay prescription claims.

WALL STREET WATCHING

Wall Street analysts said they intend to watch the Caterpillar pilot closely to see if it adds pressure to competing drug store chains or pharmacy benefits managers, including CVS Caremark Corp (CVS.N) and Walgreen Co(WAG.N).