WHAT IT MEANS AND WHY IT’S IMPORTANT — Walgreens certainly has the clout to pull off a Mexican standoff with Express Scripts. Some might think all of the tough talk last week is just the kind of posturing one puts on for negotiations and that this will all blow over, similar to last year's standoff between Walgreens and CVS Caremark. So why is it different this time?
(THE NEWS: Walgreens to walk away from Express Scripts in 2012. For the full story, click here.)
Walgreens sold its own pharmacy benefit management business because the pharmacy operator believed that its Walgreens pharmacy, Take Care Health operations, specialty pharmacy, home infusion services and other programs can be bundled as a comprehensive healthcare-services package directly to the largest employers. And they’re right.
So Walgreens may really not need Express Scripts as much as Express Scripts may need them, after all.
Another difference between now and last year: Express Scripts doesn’t have to prove its business model is economically viable, or that it’s pharmacy network doesn’t artificially steer patients to one pharmacy over another. Because as a pure-play PBM, Express Scripts equally sticks it to all pharmacies.
Separately, the National Community Pharmacists Association is using these discontinued negotiations as an opportunity to highlight just how much community pharmacy is caught between a rock and a hard place in its support of legislation that would give independents the same kind of negotiating heft that Walgreens has. A company the size of Walgreens can afford to face off with a PBM like Express Scripts — in other words, if Walgreens and Express Scripts did part ways, Walgreens will still be filling prescriptions. But what happens when a community pharmacy operation reaches its 127th hour in dealing with PBMs? They either stop filling prescriptions or learn how to adjudicate those prescriptions with just the one arm they have left.