Inside This Issue - Opinion
Walgreens stays on the offensive
September 19th, 2011
by Jeffrey Woldt
Walgreens is keeping up the pressure on Express Scripts in their battle over contract renewal terms for 2012.
In June the drug chain revealed that next year it plans to stop filling prescriptions for patients whose pharmacy benefits are administered by Express Scripts, asserting that below-market reimbursement rates proposed by the pharmacy benefits manager would make it impossible to continue to deliver service. Walgreens has just issued a white paper that spells out what Express Scripts customers — both patients and payers — stand to lose if the impasse is not resolved before January 1.
The document stresses the ease of access to high-quality pharmacy care provided by the company’s 7,760 drug stores across the country, as well as the expanding array of related services available there. The ongoing transformation of the drug store into a true community health care center is exemplified by Walgreens’ emergence as a leader providing immunizations, with more than 26,000 of its pharmacists certified to administer them, and the presence of Take Care clinics in hundreds of outlets.
Those capabilities go hand in hand with efforts to secure a more expansive role for pharmacists. As more payers and policy makers come to understand that such professionals have an unmatched knowledge of medications and their impact on the body, pharmacists are increasingly moving away from a focus on the mechanics of dispensing and devoting more time to counseling. The result is better medication adherence, improved patient outcomes and reduced overall health care costs.
The Walgreens white paper stresses that its pharmacies make a real difference in all of those areas and do so at competitive prices. Among the tools the retailer uses to reduce costs for patients and payers are a program to encourage use of generic alternatives to more expensive branded medicines and the availability of 90-day prescriptions at retail.
Walgreens presents a strong case for the positive impact it has on the patients and payers that do business with Express Scripts under the current PBM paradigm. Compelling as it is, the argument will come as no surprise to those involved in retail pharmacy.
More interesting is the white paper’s assertion that employers and other health care payers have options for obtaining pharmacy care outside the existing model. "Walgreens can contract directly with plan sponsors, or help plan sponsors establish a custom retail pharmacy network, if consistent with their current PBM agreements," it states, and it goes on to suggest that payers explore alternatives with a benefits consultant or a broker or directly with Walgreens.
As in so many areas where it does business, the retailer’s willingness to challenge the status quo is admirable. Walgreens has a lot on the line in its dispute with Express Scripts (a projected 90 million scripts and $5.3 billion in revenue next year), a stake that could get considerably bigger if the planned merger between Express Scripts and Medco passes muster with regulators. Giving payers new ways to access pharmacy care will help preserve competition in an increasingly important health care sector.