Apparently, there’s life after Express Scripts.
Walgreens took its lumps in January after failing to mend its very public rift with pharmacy benefit management giant Express Scripts, reporting a 2.3% drop in sales for the month. But considering that the PBM’s millions of customers represented $5.3 billion in prescription sales for the 7,818-store drug chain in fiscal 2011, it could have been worse.
January was the first month in which Walgreens operated without benefit of a contract to fill prescriptions for Express Scripts’ millions of members, so it marks a litmus test for the nation’s biggest drug store operator as it moves into a post-ESI era. The impact of that loss of business was plain: In spite of a 2.7% increase in sales at the front of its stores for the month, customer traffic in comparable stores — those open more than a year — fell off 0.6%. The impact on Walgreens’ pharmacy business was much more direct, with pharmacy sales down 6% and comparable-store pharmacy sales sliding 7.9%. What’s more, Walgreens pharmacists filled 8.6% fewer prescriptions during January than they did in January 2011, when Express Scripts accounted for 12.4% of the company's total prescription volume, according to the chain.
Company leaders were braced for the downturn, and had been since making the momentous decision to walk away from Express Scripts’ costly business in mid-2011. That decision was based on the failure by the two sides to come to terms over the level at which ESI reimbursed the chain for filling its members’ scripts, and since then neither side has budged.
“We expected that January would be a very challenging month on a comparable-prescription basis because of the impacts from not being part of the Express Scripts network as of Jan. 1 and the much milder cough, cold and flu season we have been experiencing,” said Kermit Crawford, Walgreens president of pharmacy, health and wellness services and solutions.
Nevertheless, Crawford said he and other company brass already are well along on the post-ESI strategy that, if successful, could serve as a template for how the retail pharmacy industry’s biggest and most powerful players could reduce their dependence on PBM contracts and still thrive. “With January now behind us, we are moving forward with relationships with large and small employers, health systems, physician groups and other PBMs who value Walgreens' ability to help lower overall healthcare costs,” Crawford said. “As we expect these relationships to grow, and as we move past the impact from this year’s weak flu season, we anticipate an improvement in the coming months in the number of comparable prescriptions filled relative to January’s result.”
On Thursday, Walgreens added another plank to its new strategic platform when it agreed to buy key assets from BioScrip, a national provider of specialty pharmacy and home health services. The addition of BioScrip's “clinically focused community specialty pharmacies and access to additional limited distribution drug therapies” will “create a strong network of support for our core drug store business to provide specialty pharmacy solutions to our patients,” Walgreens president and CEO Greg Wasson said. “This acquisition also significantly expands our nationwide reach to an additional half-million patients with chronic and complex health conditions who have strong clinical relationships with their current BioScrip pharmacy,” he added.