Walgreens contract renewal negotiations with pharmacy benefit manager Express Scripts, Inc. have been unsuccessful, and as a result, the company is planning not to be part of Express Scripts’ pharmacy provider network as of Jan. 1, 2012.”
Meanwhile, ScripNet has been a trusted Walgreens PBM provider for eight years and continues to offer access to Walgreens nationwide pharmacy network to its PBM clients.
According to a September 15, 2011 St. Louis Post Dispatch article, as a result of Express Scripts’ dispute with Walgreens, “Express Scripts Inc. has accused Walgreens drugstores of launching a false advertising campaign to steer patients away from the St. Louis-based pharmacy benefit manager. In a court filing last week, Express Scripts asked a federal judge in Chicago to grant an injunction to stop Walgreen Co. from making what it calls false and misleading statements that are designed to persuade Express Scripts members to switch over to health plans that include Walgreens in their networks.”
Yet Express Scripts has posted the following messages on its web site, “Walgreens will no longer be a participating provider in our pharmacy network effective Jan. 1, 2012 … Find Another Pharmacy Now … Now is a good time to consider moving the medications you take on an ongoing basis to the Express Scripts (mail order) Pharmacy.”
Express Scripts has become one of the nation’s largest pharmacy benefit managers through recent PBM acquisitions and also operates its own mail-order pharmacy that competes directly with Walgreens. Is Express Scripts trying to leverage its increased size and market power gained from recent PBM acquisitions, to demand advantageous contract renewal terms from the largest retail pharmacy chain in the nation?
Walgreens President and CEO Greg Wasson stated: “Under the terms proposed by Express Scripts, it would not make good business sense for the strategic direction of our company to continue our relationship with them. Walgreens is committed to providing quality, convenient and cost-effective pharmacy services to our patients, but we cannot continue to deliver these services under the terms and rates Express Scripts offered. As the largest retail provider in their pharmacy network, we were surprised by Express Scripts’ ultimate stance during our talks, which made it clear to us that they no longer had an interest in continuing a meaningful relationship.” Walgreens said it had reluctantly reached this conclusion for the following reasons:
- Express Scripts insisted on being able to unilaterally define contract terms, including what does and does not constitute a brand and generic drug, which would have denied Walgreens the predictability necessary to reliably plan its business operations going forward.
- Express Scripts rejected Walgreens request to be informed in advance if Express Scripts intends to add or transfer a prescription drug plan to a different Express Scripts pharmacy network, and to provide patients with equal access to Walgreens retail pharmacies. Walgreens cannot reliably plan business operations without clear terms, transparency and predictability governing the provider network relationship.
- Express Scripts proposed to cut reimbursement rates to unacceptable levels below the industry average cost to provide each prescription.
“We believe the long-term ramifications of accepting Express Scripts’ proposal with below market rates and minimal predictability for the services we provide would have been much worse than any short-term impact to our earnings,” said Walgreens Executive Vice President and Chief Financial Officer Wade Miquelon. “All parties involved in providing health care must work together to bring down costs. In a world where cost effectiveness and access to health care is so important, any time an intermediary continues to disproportionately grow its profit per prescription at the expense of the provider delivering the service, the relationship is out of balance.”
According to Walgreens President of Pharmacy, Health and Wellness Kermit Crawford, “Our community pharmacists are on the front line of helping to lower overall health care costs through medication adherence programs, generic conversion programs, immunization and vaccination services, and face-to-face counseling on a daily basis … We intend to do all we can to serve our patients, and are committed to working with the many companies who value Walgreens services and are seeking to provide pharmacy, health and wellness solutions.”