Walgreens and Express Scripts Battle

Walgreen’s, the nation’s largest pharmacy chain, does have a history of battling with any adversary, but the typically their disputes with pharmacy benefit managers and even Walgreen’s unionized employees have ended in agreement. However, the drugstore’s latest battle with Express Scripts Inc. may prove to be Walgreen’s first loss. And it’s turning dirty.

This is how it went. Walgreen’s and Express Scripts have failed to reach an agreement on the renewal of their current contract, which expired 1/1/12. This means members of Express Scripts, including certain unions, government agencies and corporations, will be unable to fill prescriptions at any of Walgreen’s drugstores (approximately 8,000 locations). Apparently the terms Express Scripts offered Walgreen’s were below the industry average cost to provide the prescription. Walgreen’s CEO, Gregory Wasson, in a recent conference call with analysts said that they believed that this partnership was no longer in the best interest of their company, customers, employees and shareholders. Regardless of who said what…both parties have repeatedly indicated that they would not budge on what they each considered an unfair deal.

“The two companies appear to have strong fundamental differences of opinion about their respective market power and the priorities of payers regarding cost control and pharmacy access,” said Mark Miller, financial analyst at William Blair & Co., in a research note.

As a pharmacy benefit manager, Express Scripts operates its own mail-order prescription service and negotiates with pharmacies and drug companies to process prescriptions for its members. The company said in a release that it “is receiving strong support from clients and expects greater than 95 percent of its clients’ prescription volume will move forward into 2012 without Walgreens as a network provider.”

Wasson says it is still too early to tell how much of Express Scripts members’ business the chain will be able to retain. Though he and other executives have consistently refused to provide a real estimate of what customer retention might actually be, Wasson said, “We do feel that we are having a positive response from all of our partners.”

In total, Express Scripts members accounted for 90 million of the 819 million prescriptions Walgreen’s pharmacy filled last year, according to Michael Polzin, Walgreen’s vice president of corporate communications. In November, the company said it expects to hold on to 97 to 99 percent of last year’s prescription volume. That’s a pretty large expectation to have.

Thom Gross, Express Scripts’ senior manager of communications, said he doubts the loss of access to Walgreen will inconvenience many customers.

“Of our tens of millions of members, fewer than two in 10 filled a prescription at Walgreens last year, and about one in 10 used only Walgreens for their prescriptions. We currently have more than 60,000 retail pharmacies in our network. We will (still) have more than 56,000 if Walgreens chooses to leave the network Jan. 1.”

The split will certainly bring some losses for both companies. But analysts are forecasting that Walgreen will be the bigger loser of the pair.

Now speaking of Walgreen’s (@Walgreens)…the brand is running a Promoted Trend on Twitter today, called #ILoveWalgreens. At first glance most might think this is an obvious trend to capture customers favorite things about Walgreens. But after diving into it…it’s more of a jab towards Express Scripts (@ExressScripts), and how recently their contract together ended. I do believe that Walgreens intended for the trend to capture love from their customers, but it went sour. Both brands started to attack each other through Tweets. Some are coming from followers, but they are still displayed on the brand pages. They also have put a lot of effort into stealing customers from each other. Below are some examples.

Walgreens Promoted Trend today states, “Patients should be able to choose their pharmacy, not @ExpressScripts. Tweet using #ILoveWalgreens to show your support!”

@Walgreens – “It's time to take a stand against @ExpressScripts. Tell them people want a choice by tweeting hashtag #ILoveWalgreens”

@ExpressScripts - “On our negotiations with Walgreens… Fact 1: Walgreens unilaterally stated in June it would leave our network in January.”

@ExpressScripts – “On our negotiations with Walgreens… Fact 2: Walgreens’ proposed rates/terms would make them the most expensive pharmacy in our network.”

@ExpressScripts – “On our negotiations with Walgreens… Fact 3: What Express Scripts does: make the use of Rx drugs safe, affordable and accessible.”

@ExpressScripts – “On our negotiations with Walgreens… Fact 4: With over 56,000 pharmacies in our network (http://bit.ly/tehtko), there is plenty of access.”

@ExpressScripts – “On our negotiations with Walgreens… Fact 5: It’s easy to switch. Just take your empty pill bottle to your new pharmacy; they’ll do the rest..”

@ExpressScripts – “On our negotiations with Walgreens… Fact 6: The vast majority of our clients and members have already moved on, and more plan to do so.”

Regardless which side you stand on in this battle…please remember to think before you post something over social media. Because once you do…it can never be erased.

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