Consumers face pharmacy switch

December 25, 2011 at 12:00a.m.

St. Louis Post-Dispatch

ST. LOUIS

With only a short time left before Walgreens’ contract with Express Scripts expires, can the two corporate giants resolve their differences?

If not, tens of thousands of consumers relying on Express Scripts Inc. — one of the nation’s largest pharmacy benefit managers — are likely to switch pharmacies and fill prescriptions at a location other than Walgreens, the nation’s largest drugstore chain.

Walgreen Co. broke off talks with Express Scripts on June 21, saying Express Scripts had offered a 3-year contract that would have cut reimbursement rates to below the industry’s average cost to fill prescriptions. Express Scripts — which manages prescription benefits for large employers, insurers and the Defense Department — says Walgreens has proposed dispensing rates that would eventually put the drug chain at about 20 percent above the rate paid to other contracted pharmacies.

The sides remain at loggerheads.

“We would welcome them back to the table at any time to negotiate,” said Express Scripts spokesman Thom Gross. “We would love to have them back in the network if their prices are competitive to other prices.”

Michael Polzin, a Walgreens vice president, responded: “We’ve said all along, if Express Scripts presented us a fair and competitive offer, then we would certainly be willing to consider it. ... We are still planning to be out of their network as of Jan. 1.”

Some consumers say they are at the mercy of the health insurance and pharmacy titans.

“It certainly seems like several local health-care players are throwing their weight around. ... It is hitting the consumer,” said Dolores Dace, an elementary school teacher who lives in Florissant, Mo.

If she changes pharmacies, Dace said, she’ll need to switch from a Walgreens that’s nearby and open until 10 p.m. to either a supermarket or independent that is up to three miles away.

Anthem Blue Cross and Blue Shield of Missouri, a major health-plan provider, isn’t waiting for a last-minute deal.

About one out of three insured patients in the St. Louis area belongs to the Anthem network, which uses Express Scripts to manage its prescriptions.

The company has sent about 110,000 letters to its plan members in Missouri who have used Walgreens for one or more prescriptions — informing them that the health insurer plans to drop Walgreens on Dec. 31 from its network of preferred drugstores, and advising them of three alternative pharmacies that are in close proximity.

Insurers aren’t the only ones scrambling to prepare for the switch.

Chain stores such as Walmart have posted signs welcoming new customers.

In addition to Walgreens’ most obvious local competitor CVS, prescriptions can be filled by smaller pharmacies and specialty pharmacies.

And too, pharmacies can also be found in some grocery stores, as well as at discount stores such as Target, Costco and Sam’s Club.

Meanwhile, Express Scripts, based in north St. Louis County, downplays the significance of the switch for consumers.

If Walgreens leaves Express Scripts, “we’ll still have 56,000 [pharmacies] in our network,” Gross said. “On average, there’s one pharmacy in our network within one-half mile of any Walgreens. And over 90 percent of independent pharmacies are in our network.”

Walgreen Co., based in Deerfield, Ill., has about 7,800 stores nationwide, including 6,600 drive-through pharmacies nationwide.

Securities analysts have concluded that Walgreens has more dollars to lose if the contract expires, which may push the chain to make a last-minute deal.

The current contract with Express Scripts represents about 10 percent of Walgreens’ pharmacy business nationwide, or roughly $5 billion in annual sales for the drugstore giant.