In-house pharmacy helps cut Culinary Union workers’ costs

By Liz Benston (contact)

Thursday, May 27, 2004 | 11:04 a.m.

Dramatic cost cuts in the Culinary Union's health care plan have translated into increased wages for union workers along the Strip and at downtown casinos starting June 1, an official for Las Vegas' largest union said Wednesday.

For each year of its five-year contracts with Las Vegas casinos, the Culinary Union decides how much of an increase in employer contributions are allocated between wage increases and contributions to the union's pension and health plans.

The introduction in October of an in-house pharmacy for union workers has lowered health care costs because it only offers low-cost generic drugs that are free for workers, Culinary Union Local 226 Secretary Treasurer D. Taylor said.

"We're much more interested in our members getting generic drugs than paying giant pharmaceutical companies that spend their money on television advertising," Taylor said. " 'Free' is a great price," he said.

Also, the union last year dropped about 3 percent of doctors in its health plan network, resulting in additional savings, he said. The union still offers access to 1,800 doctors and local hospitals, one of the largest networks in the state, he said.

Culinary workers on the Strip will see wage increases of 60 cents per hour, or $1,248 per year, while downtown casino workers will see wages jump by 25 cents per hour, or $1,248 for the year. The wage increases are expected to inject $50 million into the Las Vegas economy because workers will have more disposable income, the union said. The Culinary Union represents about 50,000 housekeepers, food servers, cooks and other job positions in Las Vegas casinos.

Five-year contracts the Culinary Union struck with casinos in 2002 gave Strip workers a $3.24 per hour increase in wages and benefits over five years beginning June 1, 2002 and gave downtown workers a $2.20 per hour increase in wages and benefits over the same period.

In the first year of the contract, 65 cents of a 68-cent per hour contract increase for Strip workers went to health care costs and 3 cents went to pension.

The following year, Strip workers received a 30-cent per hour increase in health care services and a 30-cent per hour wage increase. This year starting June 1, 60 cents will go to wages, 4 cents will to to the pension plan and 1 cent will go to the health plan.

The savings was a surprise for the union, which didn't calculate until now what the cost increases for health care would be in the coming year, Taylor said.

"We feel good about that. It's a win-win for the workers (and the casinos)," he said. "But we have to be vigilant" about monitoring future costs, he said.

Taylor also said casinos, which are witnessing spiraling health care costs, could learn some lessons from the union.

"We are pioneers in having a free pharmacy in town," he said.

Caesars Entertainment Inc. this week opened an in-house pharmacy for both Culinary Union and nonunion workers at its Las Vegas casinos.

About 13,400 Caesars employees will be eligible to use the pharmacy, which also offers only generic drugs that are free for workers.

The pharmacy will reduce the company's health care costs because generic drugs cost less, said Gary Earl, corporate vice president of benefits for Caesars Entertainment.

"Like every major employer we're very concerned about the rising cost of health care," Earl said. "We recognize that (prescriptions are) one of the fastest growing components of health care."

The company pays $29 per generic prescription processed at a retail pharmacy, not including the co-payment the employee pays. Brand name drugs average $101 per prescription, not including co-pays. The company will only pay an average of $15 per prescription for employees that obtain generic drugs from the company's in-house pharmacy.

Culinary members who work for Caesars Entertainment will be able to choose their employer's pharmacy or the union pharmacy.