The contract stand-off between Walgreen Co. and pharmacy benefit manager (PBM) Express Scripts Inc. hasn't changed, but the situation continues to simmer.

Walgreens, Express Scripts, pharmacy benefit manager, PBM, contract stand-off, contract renewal dispute, prescription drug benefits, Medco, RetireSafe, drug stores, Thair Phillips, American Association of People with Disabilities, AAPD, National Black Chamber of Commerce, NBCC, pharmacy services, health services, Harry Alford, Al Sharpton, National Action Network, Greg Wasson, Duane Reade, Jeff Koziel, Supervalu, Chris Dimos, Supervalu Pharmacies, Moody's Investors Service, credit ratings, ratings downgrade, Russell Redman

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Noise amplifies around Walgreens-Express Scripts impasse

January 6th, 2012

NEW YORK – The contract stand-off between Walgreen Co. and pharmacy benefit manager (PBM) Express Scripts Inc. hasn't changed, but the situation continues to simmer.

Walgreens is effectively out of the Express Scripts pharmacy provider network as of Jan. 1, as per the drug chain's announcement this past the summer regarding the contract renewal dispute. While both sides have upheld their differing views on contract terms for prescription drug services, and Walgreens has worked to retain at least some of the pharmacy business at stake, other voices have emerged calling for an end to the impasse.

On Friday, the senior citizens group RetireSafe said it has sent a letter to Express Scripts that urges the PBM to come to an accord with Walgreens. The organization cited the accessibility of the chain's 7,800-plus drug stores — notably its pharmacists — as well as the value of its other health services.

"Walgreens is a valued community partner upon which seniors and their families rely. As a representative of these Americans in communities across the country, we urge Express Scripts to put the health and safety of retired Americans first and to return swiftly to contract negotiations with Walgreens," Thair Phillips, president of RetireSafe, stated in the letter. "The loss of these services is already proving to be detrimental to the health and safety of retired Americans."

He added, "We are well aware that Walgreens provides services well beyond simply filling prescriptions. In fact, they offer 24-hour access, immunizations, walk-in health care centers, and medication management programs. Denying retired Americans access to these services is much more than a business decision; it is one that will directly affect the quality of life for hundreds of thousands of seniors."

RetireSafe echoed the concerns of other community groups and organizations voiced last month. In late December, the American Association of People with Disabilities (AAPD) joined the National Black Chamber of Commerce (NBCC) and over 130 organizations, community leaders and health care professionals in calling on Express Scripts to get back to the negotiating table with Walgreens.

"Walgreens serves as a reliable source of health care and convenience for the disability community and is a valued partner in maintaining consistent care and information for some of our most vulnerable citizens," the AAPD said in a letter to Express Scripts. "Access to consistent and good health care, pharmacy and information is an ongoing battle for Americans with disabilities, and Walgreens plays a key role in helping to provide the consistency and level of access needed."

In an earlier statement, NBCC president and chief executive officer Harry Alford commented, "We strongly urge Express Scripts to put the people of our communities at the forefront of this issue because the imminent loss of access to the critical pharmacy services Walgreens provides will be devastating to our communities."

NBCC noted in a letter to the PBM, "Walgreens is focused on high-quality, affordable and accessible traditional pharmacy services, as well as immunization services, and in some locations ... professional walk-in health care centers are located in Walgreens pharmacy stores."

Also in December, the National Action Network, led by Rev. Al Sharpton, said it sent a letter to Walgreens president and CEO Greg Wasson urging the company to rethink its plan to end its participation in the Express Scripts pharmacy network. He pointed to the chain's extensive metropolitan New York presence, including Walgreens and Duane Reade stores.

"A failure to resolve any issues with Express Scripts will have a significant and detrimental impact on New York City residents locally and nationally will significantly impact the elderly, union members, Medicaid prescriptions, other working poor and families of color," stated the letter, signed by Sharpton. "National Action Network urges you, in the strongest possible terms, to reconsider your current path."

This week, Walgreens subsidiary Duane Reade followed its sister chain by announcing a "patient transition plan" for its pharmacy customers who are Express Scripts members.

Similar to the Walgreens effort, Duane Reade's plan to assist Express Scripts members offers additional pharmacist and staff consultations, letters to patients that are also available in stores, targeted communications with high-volume patients and additional call center staffing. It also includes communications with employers and health plans to help them inform their members of the Express Scripts situation and their choices, as well as coupons for discounted health and wellness products and gift cards.

"With the start of the new year, many of our customers and patients are frustrated over losing access to Duane Reade pharmacies as a result of Express Scripts' actions," Jeff Koziel, market vice president for Duane Reade stores, said in a statement. "They want to continue the longstanding, personal relationships they've developed with their trusted Duane Reade pharmacists. As a result, they are asking us about ways that they can continue accessing our pharmacy, health and wellness services."

Meanwhile, other chain drug retailers have taken aim at Walgreens customers with Express Scripts prescription drug benefits.

For example, Supervalu Inc. on Wednesday announced that its 800 supermarket pharmacies nationwide are welcoming patients with Express Scripts prescription coverage. The retailer noted that such coverage "is no longer accepted by one of the country’s largest pharmacy retailers."

Supervalu pharmacies are in 25 states under 10 banners, including Acme Sav-on Pharmacy, Albertsons Sav-on Pharmacy, Albertsons Osco Pharmacy, Cub Pharmacy, Farm Fresh Pharmacy, Jewel-Osco Pharmacy, Shaw's Osco Pharmacy, Shop 'n Save Pharmacy, Shop 'n Save Osco Pharmacy and Shoppers Pharmacy.

"Express Scripts patients may be concerned that they no longer have a pharmacy to fill their prescriptions," stated Chris Dimos, Supervalu's president of pharmacy operations. "We want these patients to know that we welcome the opportunity to serve them and, with 800 locations across the country, Supervalu Pharmacies have the resources to meet their needs."

And on Thursday, Moody's Investors Service put Walgreens' ratings on review for possible ratings downgrade, with the credit ratings agency citing the expiration of the drug chain's contract to participate in the Express Scripts network as the reason for the move.

"Walgreens' contract with Express Scripts represented about 88 million prescriptions or $5.3 billion in revenue annually. To date, over 100 health plans, employers and other Express Scripts customers have informed Walgreens that they have taken steps to maintain access to Walgreen's pharmacies in 2012. However, this only represents about 11% of the total 88 million prescriptions that Walgreen fills annually under the Express Scripts contract," Moody's stated in its announcement on the Walgreens ratings review. "Thus, Walgreen currently continues to have a sizable amount of revenue at risk. Furthermore, the Medco contract may also be at risk should the pending merger between Express Scripts and Medco prove to be successful."