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Monday, March 05, 2012

The Future of Rx Benefits May Not Include Walgreens

This is not a current problem for our plan; but a preview of what may be coming in the months ahead.

A few years ago Walgreens set out on what seemed to be their mission; that you could stand in the parking lot of any one of their stores and see the sign for the next closest one.  There is now a Walgreens in just about every neighborhood and sometimes it seems there's one on every corner. 

That this was their mission; to take market share from other competitors, was in the normal course of business.  In the past few months, however, they have begun flexing their buying power and fighting pharmacy benefit networks.  Their goals are anything but laudable. Their position is that without them any pharmacy network would be incomplete and so they should receive a higher reimbursement for the prescriptions they dispense.

Their latest row has been with Express Scripts.  Their proposal to Express Scripts, according to my sources, would have made them the single highest-cost provider in that network.  They also wanted the right to terminate individual company plan sponsors (for reasons of which I've not received information) and dictate plan designs to plan sponsors.  They also wanted to limit Express Scripts audit rights to ensure compliance with their network contract.

Because Express Scripts refused Walgreens left their network effective January 1 of this year.  What impact that has on their network and their ability to write pharmacy benefit contracts is yet to be determined. What is relatively certain is that if Walgreens is successful flexing their muscles in the marketplace they will next turn their sights on larger networks that impact, among others, our Blue Cross Blue Shield pharmacy network. Those networks will have a tough choice to make; allow their expenses, and therefore our premiums, to rise as an accommodation to Walgreens or to allow them to leave their networks.

This will get interesting.  Stay tuned...

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