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Executive Summary

NORTHAMERICAN PHARMACEUTICAL SERVICES INC. WILL PUSH MAIL-ORDER incentives under a marketing agreement announced April 20 with an Elmsford, N.Y. mail-service firm, Employee Pharmaceutical Inc. (EPI). Northamerican Pharmaceutical Services (NPS), a Phoenix-based drug benefit firm, markets a prescription service called Managed Pharmaceutical Care. NPS was started in mid-1987 under the direction of Benjamin Ward, Sr., a former executive of McKesson's Pharmaceutical Card Service (PCS). Ward is chairman of NPS. NPS claims that its drug program "is an extraordinary contrast to other prescription drug plans." Promotion material for NPS says it "offers flexible plan design and reimbursement formula selection." The company reports that it can tailor programs to blend "coinsurance and annual maximums . . . with generic drug substitution and mail-service pharmacy incentives." Prior to the contract with EPI, NPS already had mail-order experience. One of the initial NPS clients is the Blue Cross/Blue Shield Plans of Arizona. From Jan. 1 of this year, NPS has been providing mail-service pharmacy to 33,000 enrollees in a Medicare supplement program run by the Arizona Blues. EPI is the mail-order subsidiary of EPIC Health Care Group. EPIC says that it provides mail-order services to 150 customers with over 2 mil. enrollees. Two customers account for nearly 50% of that business. In the three months ended Feb. 29, EPIC reported sales of $ 7.9 mil. The company's cost of goods was $ 6.3 mil., indicating a markup of 25%. The company showed an operating income of $ 92,000 in the quarter. NPS President Robert McLaughlin maintained that the agreement with EPI should combine with the NPS management program to "enable NPS to offer clients a 20% to 40% savings, compared to most other prescription drug programs."

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