As 2011 comes to an end it doesn't look like Walgreen's and Express Scripts will kiss and make up, forcing millions of patients to find a new pharmacy. Walgreen's refused to accept a contract that offered below the industry average cost to dispense a medication and seems prepared to give up the 90 million prescriptions it filled for ESRX in the previous year. With Walgreen's out of the network, I'm starting to wonder which pharmacy will be next?
As long as Express Scripts, and other PBM's, are allowed to own and operate a private mail order pharmacy their will always be an incentive to push patients in that direction. By owning both parts of the process (payer and provider), PBM's are able to realize incredible profits through an obvious conflict of interest. If you own an insurance company and a pharmacy, it makes sense to push out other competitors. Of the 90 million prescriptions that Walgreen's may have filled in 2012 under Express Scripts, a large portion may now be filled by the Express Scripts mail order pharmacy. Now what will happen if the contract for 2013 is even worse for pharmacies? Will other chains like Wal Mart, CVS, or Rite Aid refuse to sign the deal? Will this leave millions of patients with no choice other than mail order?
Discussion at the Dinner Table
Many friends have asked my opinion of this ordeal. I really knew it was big news when this was brought up for discussion at my family's Thanksgiving dinner by my two aunts who are school teachers in the state of Kentucky. They were upset that they could no longer get their prescriptions at Walgreen's and couldn't understand why this was happening.
I explained that Pharmacy Benefits Managers, such as Express Scripts, have been playing this game for years with community pharmacy and for once a major corporation has had enough. The independent pharmacy owners have complained about PBM contracts for several years but they have been ignored because a chain pharmacy was always willing to accept the terrible PBM offer to gain market share.
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Did you explain to your aunts that CVS is owned by Caremark, so if their group or employer used them as a PBM then Walgreen's would never have been an option. Chain pharmacies barter lower rates for market share because employer groups will switch PBM's every year if they have to so they can leverage a lower cost. This isn't new...
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