Things like this deal between Walgreens and Express Script ticks Willy off. It sounds like someone is trying to cook up a problem for Walgreens when they do not deserve it. If you are a customer or want to be a customer of Walgreens you should know the rest of the story and here it is.
For the past year, Walgreens has negotiated with Express Scripts for a new contract to continue as part of its pharmacy provider network. Those negotiations were unsuccessful, and the contract expired on Dec. 31. As a result, Walgreens is no longer part of Express Scripts’ pharmacy provider network as of Jan. 1, 2012. This includes all Walgreens pharmacies nationwide and Duane Reade pharmacies in the New York City area.
This situation of forcing pharmacy patients to go elsewhere to use their in-network pharmacy benefits was unnecessary. Express Scripts’ actions are causing disruption with no significant benefit to patients or their health plan. Patients covered by an Express Scripts plan now find themselves not only having to change their pharmacists, but many are having to drive farther to get prescriptions filled at pharmacies with less convenient hours for their hectic schedules. Walgreens offers more 24-hour and drive-thru pharmacies than any other pharmacy in the country.
And patients are not seeing their costs go down in exchange for the increased hassle they’re being subject to. It’s all pain with no gain.
Avoiding disruption and keeping costs flat
During negotiations, Walgreens offered to hold rates for a new contract flat and did not seek an increase in rates. The response from Express Scripts was to insist on being able to unilaterally define contract terms, such as what does and does not constitute a brand and generic drug. Express Scripts also proposed to slash Walgreens reimbursement rates to levels below the industry average cost to provide each prescription.
Express Scripts itself has stated that clients will not see any significant savings from excluding Walgreens from its network. In fact, costs may even go up without Walgreens because we offer competitive pricing, additional savings by dispensing less expensive generic drugs more often than other pharmacies, and savings through 90-day supplies of medications at our retail pharmacies versus three, 30-day refills.
Express Scripts could offer substantial savings to its clients by promoting 90-day refills at retail pharmacies, but it conflicts with its own mail order 90-day prescription business that it profits from. In addition, while profits per prescription among retail pharmacies have been flat or declining in recent years, Express Scripts’ profits have grown at a rate more than two times the average of peers in health care.
Express Scripts puts America’s military in the middle
One of Express Scripts’ clients is Tricare, which is the health and prescription drug program for America’s military service men and women. During negotiations, Walgreens took the unprecedented step of offering Express Scripts an ironclad guarantee that Walgreens prices would match or beat the average costs per adjusted prescription of all other pharmacies in the Tricare network. Walgreens did this in an effort to prevent our country’s military personnel from being caught in the middle. Walgreens also offered to contract separately with Express Scripts for Tricare from other Express Scripts commercial business, but these offers were rejected. Express Scripts continues to refuse to negotiate a separate contract for the benefit of the Tricare program and its beneficiaries.
What this means for Walgreens patients
Many patients under an Express Scripts plan have used Walgreens pharmacies for years and have a personal relationship with their Walgreens pharmacist. In an effort to minimize their disruption and inconvenience, Walgreens unveiled a comprehensive national effort to make this transition as smooth as possible and is doing all it can to help patients continue to use Walgreens when possible, or take care of them as they are forced to leave Walgreens in order to use their in-network coverage.
Only patients with certain prescription insurance plans managed by Express Scripts are impacted. It is best to check with your local Walgreens pharmacist to find out for sure if you’re impacted. Patients also can check the back of their prescription insurance card – if it has Express Scripts’ name there, then they may be affected. If it doesn’t say Express Scripts, then they are not affected.
Among the steps Walgreens is taking to minimize the disruption is offering a special discount on annual membership for Walgreens Prescription Savings Club. An individual can join during a special January promotion for only $5, or $10 for a family membership, and receive savings on more than 8,000 brand name and all generic medications. More than 400 generics are available with a three-month supply for less than $1 a week. Regular annual membership is $20 for an individual and $35 for a family.
Express Scripts is a health care system middleman
Express Scripts acts as a middleman between pharmacies providing the health care service and employers and health plans who pay for the medications. Because Express Scripts is the middleman, most payers don’t see the rates Express Scripts pays to Walgreens. They only know what they pay Express Scripts. When they do see what Walgreens is paid, many health plans and employers are making decisions to continue to ensure access to Walgreens because they find our prices to be competitive and believe that we can lower overall health care costs.
Express Scripts continues to gain financially from its position as a middleman as its profits have grown at a rate more than two times the average of peers in health care. Historically brokers in a marketplace take a percentage of the cost of a product for putting the buyer and seller in contact. In Express Scripts’ case, the broker is growing profits faster than the provider of the service. When the middleman is more profitable than the providers, the relationship is out of balance.
Beyond the contract issues, this issue between Express Scripts and Walgreens is really about the value of your local community pharmacy. Express Scripts wants customers to use their own mail order pharmacy business instead of your community pharmacy whenever possible. This could threaten all community drugstores in your area. Remember, community pharmacies are a valuable presence in your neighborhood when you need a pain medication as you leave the emergency room at 2 a.m., or need a flu shot and haven’t been able to get to the doctor’s office. Community pharmacies are often the first point of entry for many people into the health care system, and the value they provide by lowering overall health care costs should be recognized by Express Scripts.
Employers want Walgreens in their pharmacy network
A Walgreens proprietary survey of 823 executives and managers who are key decision makers for pharmacy benefit decisions or provide input found that 82 percent of employers said that they would not exclude Walgreens for less than 5 percent savings on their total pharmacy spend. Sixty percent of employers would not exclude Walgreens for less than 10 percent savings, and 21 percent would not exclude Walgreens from their network regardless of the amount of savings. These findings on employer attitudes are consistent with recent research published by several leading equity research analysts.
Employers value having Walgreens as a pharmacy option for their employees, but Express Scripts wants to take that choice away.
That is what is cooking with Willy.