Walgreen Co. and Express Scripts Inc. have reached an impasse in negotiations and will not renew their contract set to expire on Jan. 1, 2012.
Carriers of Anthem Blue Cross & Blue Shield, Murray State University’s health care plan and part of the Express Scripts network, will no longer have in-network benefits with Walgreens once the new year begins.
Michael Polzin, divisional vice president of corporate communications for Walgreen Co., said contract negotiations began to disintegrate in early June 2011.
“It boils down to the fact that Express Scripts doesn’t value the services of community pharmacies,” Polzin said. “It became clear to both sides that an agreement was not going to be reached.”
Friction began, Polzin said, when Express Scripts Inc. devised its own mail service facility, allowing customers under the Express Scripts umbrella to purchase 90-day prescriptions and have them mailed to their doorstep.
“This pushed the business away from the community pharmacy and toward their mail-order business,” he said.
Polzin said most customers don’t know it is the 90-day supply making it less expensive, not the actual parcel arriving in the mail.
“Walgreens is a leader in promoting 90-day supplies being available at community pharmacies,” he said.
Due to conflict of interest between the once-agreeing companies, Polzin said Walgreen Co. began informing patients and customers of their insolvency in August 2011 so as to avoid confusion and bitter feelings among their customer base.
“Express Scripts is not interested in seeing community pharmacies save their customer’s money,” he said.
A statement provided by www.express-scripts.com claims otherwise, citing rising costs within the Walgreens network.
“At Express Scripts, we’re committed to keeping your prescription drugs affordable and accessible,” it read. “Unfortunately, Walgreens’ proposed 2012 prices are much higher than the other pharmacies within our network. If we accepted Walgreens’ rate, their higher costs may affect your future premiums.”
In September 2011, Express Scripts discovered Walgreen Co. was informing customers of the contractual dispute and dissolution. In response, they filed suit, claiming breach of contract in the original agreement.
Polzin said Express Scripts has a tough road ahead if they wish to compete in such a stiff market.
“Looking at the long term of 2012, Express Scripts will be going to the market trying to win business with a network that doesn’t include Walgreens,” he said. “All other PBMs (pharmacy benefit managers) will be in the same market pitching to the same people, but with Walgreens in their network.”
Polzin estimated Walgreens would not stand to lose $5.3 billion annually provided by the customer network under Express Scripts because people have either changed PBMs or changed their prescription plans under provisions included in Medicare Part D.
“Faculty and staff could push Murray State, when contractually able, to revise their health care plan and find a PBM that allows Walgreen’s within their network to meet the needs of those covered,” he said.
Polzin and Walgreen Co. anticipate Express Scripts to have their business at risk without Walgreens in their network.
“The important thing is that our pharmacists provide a great deal of value to our patients and the healthcare system overall,” he said. “By helping patients with their drug therapy, we can lower overall healthcare cost, not just pharmacy cost. Express Scripts simply doesn’t recognize this value.”
Kelly Sturgeon, junior public relations major from Evansville, Ind., said she and her family are inconvenienced by the changes made between the two companies.
“Whenever I have to transfer any of my prescriptions, it’s just easier to go to Walgreens because we have them in my hometown,” Sturgeon said. “Now we have to actually go to WalMart or CVS and do more shopping there instead of what I’m used to.”
Department of journalism lecturer Elizabeth Thomas, however, has already switched her prescriptions to the 90-day mail service provided by Express Scripts in order to avoid the situation altogether.
“In researching Murray pharmacies and my options, I found Walgreens had the longest wait time and was more expensive (for me),” Thomas said. “I switched to WalMart. I then found I had another option that was significantly more convenient and saved me money, and I hated standing in the long lines at WalMart, too.”