PHARMACY

Walgreens to walk away from Express Scripts in 2012

BY Michael Johnsen

DEERFIELD, Ill. — Walgreens on Tuesday announced the company no longer will participate in the Express Scripts network beginning Jan. 1, 2012, citing unsuccessful renewal negotiations.

"Under the terms proposed by Express Scripts, it would not make good business sense for the strategic direction of our company to continue our relationship with them,” Walgreens president and CEO Greg Wasson said. “As the largest retail provider in their pharmacy network, we were surprised by Express Scripts’ ultimate stance during our talks, which made it clear to us that they no longer had an interest in continuing a meaningful relationship."

The move eliminates almost 8,000 pharmacies from the PBM’s network, including all Walgreens locations and Duane Reade locations in New York.

Express Scripts processes approximately 90 million prescriptions that are expected to be filled by Walgreens in fiscal 2011, representing approximately $5.3 billion in annual sales.

"We believe the long-term ramifications of accepting Express Scripts’ proposal with below-market rates and minimal predictability for the services we provide would have been much worse than any short-term impact to our earnings," Walgreens EVP and CFO Wade Miquelon said. "All parties involved in providing health care must work together to bring down costs. In a world where cost effectiveness and access to health care is so important, any time an intermediary continues to disproportionately grow its profit per prescription at the expense of the provider delivering the service, the relationship is out of balance."

According to Walgreens, negotiations broke down for several reasons. For example, Express Scripts insisted on being able to unilaterally define contract terms, including what does and does not constitute a branded and generic drug, a factor that would have denied Walgreens the predictability necessary to reliably plan its business operations going forward, Walgreens stated.

The Chicago pharmacy operation also charged that Express Scripts proposed to cut reimbursement rates to “unacceptable levels” below the industry average cost to provide each prescription.

Walgreens stated it had proposed to lower rates on behalf of the Department of Defense’s Tricare program, a pharmacy benefit plan managed by Express Scripts. Under Walgreens’ proposal, the reimbursement cost for the DOD would have been lower than Walgreens’ commercial rates. In addition, Walgreens offered to contract separately with Express Scripts for Tricare beneficiaries, in order to continue providing services for all active and retired military personnel, the company stated.

For all other plans managed by Express Scripts, Walgreens offered to hold rates for a new contract at the level that will be in effect with Express Scripts at year end, which will be lower than current rates.

Moving forward, Walgreens noted that Medicare Part D patients who use its pharmacies will continue to have the option during the open enrollment period near the end of the year to choose a Part D plan that includes Walgreens. In addition, some Express Scripts clients may have the ability to include Walgreens as part of their benefit offering. As a result, Walgreens said it will look for opportunities to have discussions with Express Scripts clients, consistent with their contractual agreements, to ensure their beneficiaries can continue to use the convenience of Walgreens’ nationwide locations.

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Lilly, BI gear up to present data from studies of diabetes drugs

BY Alaric DeArment

RIDGEFIELD, Conn. — Just after the approval of their new treatment for Type 2 diabetes, Eli Lilly and Boehringer Ingelheim plan to present data in more than two dozen presentations at the American Diabetes Association Scientific Sessions starting this week.

Lilly and BI, which recently launched the oral diabetes drug Tradjenta (linagliptin) will present data from studies of the drug, as well as studies on BI-10773, an investigational diabetes drug made by BI.

The Food and Drug Administration approved Tradjenta in May, and the drug became available in pharmacies last week. Soon after the approval, Amylin Pharmaceuticals, which markets the injected Type 2 diabetes drug Byetta (exenatide), filed a lawsuit against Lilly in an attempt to prevent it from using the same sales staff to market both drugs, alleging that it would infringe on their Byetta agreement; however, a federal judge in San Diego threw out Amylin’s claims.

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Mylan wins summary judgment pertaining to generic Copaxone

BY Alaric DeArment

PITTSBURGH — Mylan has scored a victory in its efforts to make a generic version of a Teva drug for multiple sclerosis.

The U.S. District Court for the Southern District of New York denied Teva’s motion for a summary judgment finding no inequitable conduct in relation to Copaxone (glatiramer acetate).

Inequitable conduct is when the maker of a branded drug did not properly complete its application when filing for a patent for the drug. When a generic drug maker wishes to gain early entry for its version of the branded drug, it can file an approval application with the Food and Drug Administration that contains a paragraph IV certification, an assertion that the patent is invalid, enforceable or won’t be infringed, based on a finding of alleged inequitable conduct.

A trial in which Mylan will defend its assertion of inequitable conduct will begin on July 11.

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