Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.
By Lauren Flynn Kelly, Editor
June 8, 2012 Volume 13 Issue 11
Although Walgreen Co. claims the mutual dismissal of a lawsuit filed by Express Scripts Holding Co. against its former network pharmacy has no bearing on future relations between the estranged parties, industry insiders predict another development in their year-long dispute may not be far behind.
Walgreens said June 1 that both parties agreed to dismiss the lawsuit, which was filed by Express Scripts last fall and alleged that Walgreens used false advertising to encourage Medicare beneficiaries to abandon Express Scripts (DBN 9/23/11, p. 8). Although Walgreen Co. claims the mutual dismissal of a lawsuit filed by Express Scripts Holding Co. against its former network pharmacy has no bearing on future relations between the estranged parties, industry insiders predict another development in their year-long dispute may not be far behind.
Walgreens said June 1 that both parties agreed to dismiss the lawsuit, which was filed by Express Scripts last fall and alleged that Walgreens used false advertising to encourage Medicare beneficiaries to abandon Express Scripts (DBN 9/23/11, p. 8). “These dismissals have no impact on the parties’ ability or inability to come to terms on a pharmacy agreement,” Walgreens stated.
“That lawsuit really had to do with Walgreens’ statements in marketing. It could indicate a slight thaw, but fundamentally, it’s really a distraction from the main story,” asserts Adam Fein, Drug Channels author and president of Pembroke Consulting, Inc.
The main story being that Walgreens backed away from contract negotiations a year ago (DBN 6/24/11, p. 1), losing 90 million prescriptions filed for Express Scripts customers, or about $5 billion in annual business. “They’ve suffered dramatic losses, and so any kind of settlement is going to be viewed as positive,” asserts Fein. “My personal view is regardless of who is right or wrong — and I don’t know who is right or wrong here — I do not believe Walgreens can win the battle. And even if they do sign, it’s going to take years for them to recover what they’ve lost and a lot of the customers are just gone forever.”
“I haven’t seen any indication that Express Scripts and Walgreens are making progress in their negotiations, although the resolution of legal issues is favorable,” adds Morningstar Inc. securities analyst Matthew Coffina.
Selling Season Could Bring Resolution
“I think it is likely that you will see some news soon: either a resolution or Walgreens explicitly walking away from the Medco business,” he predicts. Express Scripts acquired Medco Health Solutions, Inc. in April (DBN 4/6/12, p. 1). “We are getting into the heart of the PBM selling season, which is Walgreens’ best and last chance to exercise some bargaining leverage over Express Scripts.”
Neither Walgreens nor Express Scripts has disclosed when Medco’s existing contract with Walgreens expires, although sources speculate it could be the end of this year.
“The real test will be the selling season,” says Fein. “Will Express Scripts/Medco suffer from not having Walgreens in the network? My belief is they won’t suffer because they can offer clients a range of options: an option without Walgreens in an Express Scripts model, an option with Walgreens but with an explicit upcharge for the presence of Walgreens in their network or a traditional relationship via the Medco legacy contracts. This selling season Express Scripts has a lot of flexibility and Walgreens does not.”
Walgreens recently signed a new multiyear agreement with OptumRx, the PBM unit of UnitedHealth Group, which it announced with positive remarks from OptumRx. “This is a great opportunity to ensure our current and prospective customers have a broad range of options, including access to premier retail outlets like Walgreens, to help meet their health care needs,” said OptumRx CEO Dirk McMahon in a prepared statement.
“This [contract renewal] seems fairly routine, but Walgreens is obviously keen to show that some payers are still willing to work with it,” adds Coffina.
An Express Scripts spokesperson declined to comment on the future of Medco’s existing contract with Walgreens. “At this point, legacy Medco clients continue to have Walgreens within their pharmacy network,” he tells DBN. “We do not comment on rumors or speculation,” adds a Walgreen spokesperson.
No comments:
Post a Comment