WAG, ESI bury the hatchet

When Walgreens and Express Scripts finally came to terms and agreed to again do business with each other in mid-2012, it marked the formal end of one of the costliest disputes in the history of pharmacy retailing and managed care. 

Walgreens and ESI announced July 19 that they had “reached a multiyear pharmacy network agreement that includes rates and terms” that both sides could live with, although those terms were not disclosed. 

The resolution of the impasse ended an ugly chapter in the history of the sometimes-
strained relationship between retail pharmacies and the PBM industry. But other disputes are inevitable as pharmacy providers jostle with PBMs over contracted payment rates for prescription dispensing and pharmacy services. And it was telling that many pharmacy operators — particularly smaller independent owner/
operators and small and regional pharmacy chains without the clout or market penetration of a Walgreens — had applauded the big chain for being determined enough and powerful enough to draw a line in the sand with ESI over reimbursement terms.

The new contract became effective Sept. 15. And Walgreens began the process of trying to woo back the millions of customers that were pried away by CVS/pharmacy, Rite Aid, Walmart and other competitors after the original Walgreens/ESI service contract expired at the beginning of this year.

Presumably, that means that Walgreens isn’t losing money by serving ESI customers, as it claimed it would have been forced to do under the original terms offered by ESI. Still to be resolved, however, are other questions. Among them: How many ESI members will Walgreens be able to win back to its own pharmacy counters now that they’ve been wooed away by its competitors? Will the two sides be able to negotiate agreeable terms when contracts again come up for renewal? And, on a broader front, will the retail pharmacy and PBM industries continue to forge workable relationships that serve not only their own business interests, but also the interests of payers and patients in an era of health reform, accountable care and outcomes-driven reimbursements?

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