Contract between Walgreens and Express Scripts in jeopardy

Tuesday, September 13, 2011 | 7:16 p.m. CDT; updated 2:41 p.m. CDT, Wednesday, September 14, 2011

*CORRECTION: Pharmacy benefit managers run their own mail-order pharmacies and negotiate with drug manufacturers and retail pharmacies. An earlier version of this story misstated that information.

COLUMBIA — Walgreens could soon no longer be an option for people whose prescriptions are managed through Express Scripts — and that includes UM System employees. 

Walgreens and Express Scripts have been in contract negotiations that remain contentious. On June 21, Walgreens announced the separation. As of Dec. 31, Walgreens won't be part of the Express Scripts network, according to a letter it sent out to its Express Scripts customers. The letter urges customers to talk to their human resources departments and let them know they want Walgreens to remain an option.

About pharmacy benefit managers

Express Scripts is a pharmacy benefit manager, often called a PBM. But just what is a pharmacy benefit manager?

Here's an explanation from Thom Gross, Express Scripts spokesman.

Pharmacy benefit managers were started about 25 or 30 years ago. As more drugs were introduced into the market and the cost of providing benefits to employees increased, employers brought in experts to find ways to keep costs down. Thus, pharmacy benefit managers such as Express Scripts were born.

These management companies *run mail-order pharmacies and negotiate with drug makers and retail pharmacies to provide medications at a lower rate.

Related Articles

Express Scripts is a pharmacy benefit manager — a company that *runs mail-order pharmacies and negotiates with drug manufacturers and retail pharmacies to keep medications affordable.

The UM System will continue using Express Scripts despite the potential loss of Walgreens, Jennifer Hollingshead, assistant director of publications and marketing for the UM System, said in a statement. But Hollingshead said she was hopeful Walgreens and Express Scripts might still reach an agreement.

Express Scripts is still open to negotiations, but Thom Gross, Express Scripts spokesman, said, “Walgreens walked out of negotiations in June.”

Gross said the central issue is price competitiveness. Express Scripts agrees to reimburse pharmacies in its network for filling prescriptions at discounted rates. Savings are passed along to Express Scripts' clients — health plan sponsors. Walgreens is the highest-priced pharmacy in the Express Scripts network and wants to charge more than other pharmacies, yet continue doing the same service, Gross said. That means Walgreens would be paid more to perform the same service other pharmacies do for less, he said.

If Express Scripts accepted Walgreens’ contract terms, the chain would be priced 20 percent higher than the rest of the pharmacies in the network by the end of the three-year contract. Express Scripts can’t allow that, Gross said.

“We think that Walgreens should be competitive with other pharmacies in the network,” he said. With Walgreens in the mix, that network includes more than 60,000 pharmacies nationwide. Without Walgreens, there are more than 56,000 pharmacies in the network.

Patients who want to continue using Walgreens after the contract ends will have to pay full price for their prescriptions. He said the best alternative is to change pharmacies.

That's a change UM employees will most likely have to make. Hollingshead said in her statement that " . . . our employees, like several hundred thousand other Missourians who use Walgreens to fill their prescriptions through Express Scripts, as well as millions more nationwide, will need to transfer their existing prescriptions to another pharmacy."

A directory search for Express Scripts-related pharmacies in the Columbia area yielded plenty of results — there were at least 20. None of them, however, are  24-hour pharmacies, like the Columbia Walgreens store at 222 E. Broadway. In fact, there aren't any 24-hour pharmacies within a 25-mile radius of Columbia that Express Scripts supports.

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Corey Parks September 13, 2011 | 10:38 p.m.

Those of us on Tricare were also informed a few weeks ago by letter from Walgreens that the contract would not be renewed and that we would have to look elsewhere for your prescriptions. Walmart it is then....

(Report Comment)
Kellie Kotraba September 14, 2011 | 7:56 a.m.

Hi, Corey. Thanks for the comment. I'm the reporter who wrote the story. If you don't mind me asking, where is it that you work? I'm curious about just how much of Columbia this affects — I'm wondering what other large groups of employees are affected by this contract.

Kellie Kotraba
Reporter, Columbia Missourian

(Report Comment)
Stephen McLane September 14, 2011 | 8:53 a.m.

It also affects all of the State of Missouri employees as well. For those of us who travel and keep non-tradational hours this is going to be big deal.

(Report Comment)
mike mentor September 14, 2011 | 9:52 a.m.

I guess if Walgeens offers the only 24 hour pharmacy, the statements made by Mr Gross arne't exactly accurate.

... "(Walgreens)wants to charge more than other pharmacies, yet continue doing the same service, Gross said. That means Walgreens would be paid more to perform the same service other pharmacies do for less"...

I don't know if 20% more is a reasonable mark-up for offering 24 hour service, but offering 24 hour service is certainly more costly...

(Report Comment)
Kellie Kotraba September 14, 2011 | 8:20 p.m.

@ Stephen McLane,

Thank you for the tip — I plan to do more reporting on this issue, and what you mentioned is good for me to know.

Kellie Kotraba
Reporter, Columbia Missourian

(Report Comment)
Tony Flores September 15, 2011 | 10:06 p.m.

I work for Walgreens and we are very disappointed about the potential loss of our customers. The comment from Mike saying that the article is not entirely accurate is something that I agree with.
Walgreens has the most conveninent hours than any other pharmacy around. We care about our patients and are open on holidays. That has always been our way; Walgreens will be open to fill medications. I have worked many holidays and customers say "I feel so sorry that you have to work, but I am so glad that you are open". Many Pharmacies close at 5 p.m. or 8 p.m., ours is open til 10 pm.
I hope an agreement is ultimately made, but I don't believe we can offer superior service and convenient hours at the same cost as a competitor who is closed when the patient really needs them.

(Report Comment)
Corey Parks September 15, 2011 | 10:53 p.m.

Kellie Kotraba: I work for myself but my wife and I have Triwest though the Military.
Don't get me wrong it does not affect us all that much since we can just go to Wal Mart or the VA. It was just kind of habit to stop in Walgreens .

Mike Mentor: I would agree that if they were the only 24hr service provider they could defend the hire prices but you know as well as I do that they do not have the 24hr service specifically to cater to express Scrips. That would be similar to me charging my customers 2 times as much because I schedule their jobs on a weekend.

(Report Comment)
Kellie Kotraba September 16, 2011 | 11:23 a.m.

As the reporter who's been working on this, I appreciate all your comments — thanks for helping tell the story.

When I started working on a follow-up, I found out that Express Scripts is suing Walgreens. The main argument is that Walgreens is trying to lure away Express Scripts customers. You can read the article here:

My editor and I have decided that since this is a big national issue, we're going to leave most of the coverage to the national media for now. We'll continue posting articles from the Associated Press, and I'll keep an eye on the issue and its potential effects on Columbia.

Thanks again for your responses — keep the conversation coming.

Kellie Kotraba
Reporter, Columbia Missourian

(Report Comment)

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