Walgreens outlines impact scenarios from Express Scripts withdrawal

BY Michael Johnsen

DEERFIELD, Ill. — Walgreens mitigated projected repercussions out of the chain’s withdrawal from the Express Scripts pharmacy network come January, as the Walgreens/Express Scripts failed negotiations again dominated the pharmacy’s quarterly analyst call Tuesday morning. All told, Express Scripts represents $5.3 billion in revenue to Walgreens, but the Chicago-based pharmacy is working toward retaining the prescription business from several employers and payers, "consistent with their contractual obligations," executives emphasized.

And Wall Street investors continued to express their unease with the Walgreens/Express Scripts situation, as the stock value dropped despite better-than-antcipated fiscal 2011 results. Walgreens stock dipped as much as $1.70 from Monday’s close of $36.03 per share in early morning trading. By mid-morning, the stock recovered a little as it traded for $34.75 per share.

Walgreens president and CEO Greg Wasson outlined a range of plan retention scenarios. Worst case scenario: Walgreens retains only 25% of the business presently represented by Express Scripts, or $1.3 billion, an impact that would have a negative $0.21-per-share impact in fiscal 2012 year-end results. Best case, Walgreens retains 75% of that business, or $4 billion, and only realizes a negative $0.07-per-share impact on year-end results.

"Over time, we plan to win back more and more of those plans," noted Wade Miquelon, Walgreens EVP and CFO. So any losses will have the greatest impact in the first quarter, and that impact is expected to lessen further into the year as Walgreens successfully negotiates with plan administrators. "It’s a shifting payer landscape," Wasson said. "Payers, in general, are looking more holistically in how to lower healthcare costs." Without getting into detail, Wasson acknowledged Walgreens was "working with several partners" and that many of those negotiations represented "positive discussions."

"This is not going to be a single-year event," Wasson said. More and more plan administrators will have an opportunity to review their PBM contract and evaluate any impact from a PBM-sans-Walgreens as the year progresses, Wasson said.

Not included in those impact calculations is the possibility of a Express Scripts/Medco merger, though that wouldn’t change anything, Wasson said. "We wouldn’t accept terms similar to what Express Scripts offered from any PBM, regardless of what happens."

Before the analyst call was dominated by the PBM issue during the question-and-answer segment, Walgreens reported some strong full-year results and expressed confidence in its healthcare gameplan going into fiscal 2012. The Chicago retailer realized several key milestones in the past year, including the fact that 1-out-of-every-5 prescriptions in America were adjudicated by a Walgreens pharmacist. Those 819 million prescriptions dispensed represented an increase of 5.3% in prescription volume. And Walgreens, along with its retail clinic operation Take Care Health, delivered 6.4 million flu shots last year, second only to the U.S. government. Flu shots represent "a great example of customers coming to the [pharmacy setting] for greater healthcare services," Wasson said.

Walgreens also strengthened its retail healthcare position through several collaborative relationships with a number of hospitals and health systems "aimed at improving patient care and providing greater access to important healthcare services while lowering costs." Recently announced coordinated care partnerships include Northwestern Memorial Physicians Group, Johns Hopkins Medical Center, Ochsner Health System in New Orleans and Memorial Health in Jacksonville, Fla.

Coming into the next year, Walgreens plans to further transform its traditional drug store model into a "retail health and daily living store" as the chain continues to realize multichannel synergies from its recent acquisition of and continues to expand its fresh food offerings and food oasis formats.

For the year ended Aug. 31, Walgreens reported a fiscal 2011 sales increase of 7.1% to $72.2 billion and returned $2.4 billion to shareholders through dividends and share repurchases.

For the quarter ended Aug. 31, comparable sales were up 4.4%, with a front-end same-store sales increase of 4.6%. Customer traffic in comparable stores increased 1.6% for the fourth quarter, while basket size increased 3%.

Prescription sales, which accounted for 65.4% of sales in the quarter, climbed 5.7%, while prescription sales in comparable stores increased 4.4%. The company filled 202 million prescriptions, an increase of 4% over last year’s fourth quarter. Prescriptions filled in comparable stores increased 3.4% in the quarter. The company exceeded by 2.3 percentage points the prescription growth rate of the rest of the industry during the same period, as reported by IMS Health, Walgreens noted in a press release Tuesday morning.


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D.Johansen says:
Mar-03-2012 01:51 am

It's interesting that another complaint against Express Scripts is it’s promise to hire hundreds of employees only to lay off the workers for specious reasons. After a series of complaints by patients and doctors, Express Scripts hired more than 100 new physician contact employees in November 2009 to handle a severe backlog. They even hired more than 100 employees through a temp service and paid them $.25 more than their $12.25 hourly workers. Workers learned of the pay rate when they were sent a postcard ad in error by the agency. By September 2010, the company laid off these and other workers due to ‘business needs’ and ‘inability to maintain sales goals.

vryanb18 says:
Sep-28-2011 11:02 pm

JUST SAY NO TO DRUG GIANT EXPRESS SCRIPTS Over a year ago, the Memphis Gas, Water and Light board voted not to award it’s lucrative $59.3 million employee pharmacy benefit plan to St. Louis-based pharmacy manager Express-Scripts, Inc. The action caught the over-confident giant off guard. After learning that the city’s employee benefits might go to its rival competitor Medco, Express Scripts begged the city for an appeal. After much more debate, the city again voted to decline Express Script’s request. Perhaps, that made the giant think it’d be easier to just buy out the competition. So today Express Scripts is planning to do just that. This whole matter of a merger will come before Congress very soon because there appear to be ant-trust concerns. Issues of impropriety are compounded by the fact that Express Scripts holds a plum account with the U.S. Department of Defense. However, the issue of improprieties by Express-Scripts is important not just to government employees, but to workers and patients across the nation. The City of Memphis gave many reasons for disapproving the Express Scripts bid, which incidently came in $133,000 less than Medco’s. Undoubtedly, among them were constant complaints of poor customer service, rigid plan restrictions, and unfair policies and vindictive practices towards its own workers. During the months leading to the final vote, the media covered an informational picket at the company headquarters by union workers from Bensalem, Pa. Non-union workers in St. Louis were secretly advised to ignore the pickets, not to interfere and stay away from picket lines. 222-2 Customers from accounts like Lowe’s complain of strong-arm tactics that force them to switch many of their cheapest meds from local pharmacies to mail-order. Calls and letters are relentless. If members decline mail order, they are forced to call Express Scripts to opt out or ask for an extension to get meds at a local pharmacy. Meanwhile, critical medications are seemingly held hostage or delayed until decisions are made by Express-Scripts about how they will receive their medications. Customer service workers are advised to show no mercy, but obtain the illusive sale. Pharmacists say such delays and sales tactics, coupled with questionable 90 day supplies of some vulnerable medications, place the health and safety of patients at risk. In one instance, an elderly woman in Brooklyn, N.Y. traveled by bus in the summer heat to get her medication only to find the $150 payment denied while Express Scripts and the doctor debated cheaper mail order alternatives. In a call to the woman’s local pharmacist, the Express Scripts employee lamented, “I told her not to go out in this heat until I called her.” To which the pharmacist replied, “Oh, she’s been here and gone, but she got her medication. A nice young man in line simply handed over his credit card and paid for it.” Another complaint against Express Scripts is it’s promise to hire hundreds of employees only to lay off the workers for specious reasons. After a series of complaints by patients and doctors, Express Scripts hired more than 100 new physician contact employees in November 2009 to handle a severe backlog. They even hired more than 100 employees through a temp service and paid them $.25 more than their $12.25 hourly workers. Workers learned of the pay rate when they were sent a postcard ad in error by the agency. By September 2010, the company laid off these and other workers due to ‘business needs’ and ‘inability to maintain sales goals.’ 333-3 One worker who was just shy of her one year anniversary said, “I had just signed in when I was whisked away. I couldn’t even return to my desk.” Among those employees who were laid off were customer service workers recently laid off from TWA, Western Union, among others. Sadly, Express Scripts promised Missouri lawmakers these jobs as part of a tax reduction package to keep the giant located here. What lawmakers did not know is that Express Scripts penned a similar deal in Indiana last year when it announced a state-of-the art facility was being built there. The final blow to many laid off employees was an opportunity to regain employment in January 2011 at a local customer service firm contracted to handle Express Scripts’ work for $10 an hour. Express Scripts may have broken the law in 2009 when it sent several emails asking employees to protest President Obama’s health care plan. The health care plan would definitely place restrictions on how and what medications would be regulated. Emails sent by Chairman George Paz asked employees to click on a link to send a ready-made letter to their legislators. If employees failed to do so, they were repeatedly sent the email. Finally, news reached nervous employees that they would eventually be terminated if they did not respond. Sadly, many of the employees who failed to respond were among those terminated. Congress will be hard-pressed to find any support for Express-Scripts from workers or patients in the Gateway city, in the Pennsylvania steel town or city of brotherly love, or if they go walking in Memphis. -30- Victoria Ryan-Bailey has worked in public relations and customer service for 20 years.

Sep-27-2011 02:48 pm

Having first praised some areas WAG's successes [below], there are internal issues that inhibit the company's ability to execute on its promised transformation into a health care company. 1. Its corporate leaders do not understand how to fully engage, incorporate or manage clinics that include a broad range of physician services. 2. Its retail clinics continue to give away more income that they are responsible for generating than they retain. 3. While pharmacy services represent the company's history and executive leadership, WAG's growth is more like that of a real estate company. If the U.S. is looking for a company to integrate, coordinate and bend the cost curve on health, Walgreen's seems unlikely to become that leader. The same can be said of health insurance companies and hospitals. The jury is still out on whether a transformed Walmart will decide to play that role.

Sep-27-2011 12:33 pm

This is the leadership team that: * dramatically recovered after CVS blew past them with acquisitions of MinuteClinic and CareMark; * transformed previously-unsustainable, stand alone, nurse practitioner, retail clinics by adding 300+, far more comprehensive and profitable employer-based centers; * recognized the need to transform the look, feel and scope of their retail stores, along the lines demonstrated in their Wall Street makeover of Duane Reade; * understands that pharmacists are among the most underutilized healthcare professions in our fragmented, non-system; * recognizes the need to partner, align or otherwise expand their relationship with insurers; and * had the courage to resist further disintermediation in relationships with their corporate pharmacy customers.



Walmart’s exclusive Salon Perfect beauty brand announces ‘Footloose’ promotion

BY Antoinette Alexander

LOS ANGELES — Salon Perfect, a brand of lashes and brow products sold exclusively at Walmart, has partnered with Paramount Pictures’ upcoming film, "Footloose," which opens Oct. 14.

The partner campaign includes full-page ads in Lucky, Teen Vogue and InTouch Weekly magazines; displays at Walmart stores nationwide during the month of October; presence on a Times Square digital billboard; online banner ads; and a national sweepstakes to win movie tickets to see "Footloose."

Sold exclusively at Walmart stores nationwide, the Salon Perfect brand offers beauty solutions with prices starting at $3.

"Footloose," a new take on the 1984 classic film, tells the story of Ren McCormack (played by newcomer Kenny Wormald), who moves from Boston to the small Southern town of Bomont, where loud music and dancing have been banned. Ren challenges the ban, revitalizing the town and falling in love with the minister’s daughter, Ariel (Julianne Hough), in the process.


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Poll: More Americans endanger health amid tough economy

BY Alaric DeArment

YONKERS, N.Y. — A growing number of Americans are putting their health at risk in order to save money, according to a new study.

Consumer Reports’ annual prescription drug poll found that 48% of respondents currently taking a prescription drug said they’d cut healthcare costs by putting off a doctor’s visit or medical procedure, declining tests or ordering drugs from outside the United States — a 9% increase over 2010.

Twenty-eight percent have resorted to actions that are potentially dangerous, such as not filling prescriptions, taking expired medications or skipping a scheduled dosage.

At the same time, 41% of respondents said their doctors only sometimes or never recommended generic drugs, despite the ability of generics to save money.

"Doctors need to be stewards of their patients’ resource concerns," Consumer Reports Health Ratings Center director John Santa said. "When you walk into your doctor’s office you are a patient, first and foremost, but you are also a consumer, and your doctor should be tuned to this, especially during these tough times."

Forty-three percent of respondents said information about whether their doctors accept money or gifts from drug companies was "very valuable," a 9% increase over 2010. Meanwhile, 88% of respondents who take a prescription drug harbored misgivings about the drug industry’s influence on their doctors’ prescribing habits, while 72% said drug companies had too much influence. Fifty-two percent said doctors were too eager to prescribe a drug instead of considering alternate methods of managing conditions, while 49% said the drugs their doctors prescribed were influenced by gifts from drug companies.

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