Walgreens is on the offensive this month, informing both employers and employees that it’s no longer part of the Express Scripts network. Kermit Crawford, president of Walgreens’ pharmacy, health and wellness business, recently sat down with EBN to discuss how the company plans to move ahead.
EBN: What are the latest developments regarding your withdrawal from the Express Scripts Network and what does it mean for employers and patients going forward?
Crawford: Unfortunately, we were unable to come to a contract agreement with Express Scripts. We actually went back in mid-December and made an offer that had substantial cost concessions in it. Express Scripts chose not to accept that offer and actually proposed to push negotiations into the New Year, which we all know is what is causing that patient disruption, confusion and inconvenience for a lot patients that we’ve seen beginning January 1.
So right now, we’re continuing to execute our plan to help as many customers as we can through this transition. There are certainly a lot of patients who want to stay at Walgreens. We’re working with those patients. One of the solutions we have for them is our prescription savings club card, which has discounted pricing on over 8,000 brand products and all generic products.
For those that are being forced to leave Walgreens at this time, we’re helping make things go as smoothly as possible for those folks. We’ve put additional staffing in our stores, our teams are prepared to answer questions. We think we covered that base pretty well. We put a 1-800 number for employers that can help with questions they might have. So we’re doing everything we can to help our patients in which ever way we can, whether they find ways to continue to stay with Walgreens or, unfortunately, if they ha1e to transfer.
EBN: Walgreens conducted a survey of employers in the last quarter of 2011. Can you tell me about the results of that?
Crawford: What we found is 82% of employers said they would not exclude Walgreens from their network for less than a 5% savings. Sixty percent said they wouldn’t exclude Walgreens for less than 10%. And 21% said they would not exclude Walgreens at all.
EBN: It also noted Walgreens believes it will win back Express Scripts customers over time. Can you tell me why?
Crawford: I absolutely think we will win back customers over time. We’ve publicly said we’ve won over 120 payers — either they’ve switched PBMs or they had the ability in their contract to separately contract to have Walgreens in the network. So, over 120 people have already done that.
Also, we surveyed both self-insured employers and fully insured employers. Only 4% of self-insured employers said they would most likely renew with Express Scripts. Only 6% of the fully insured said they would renew with ESI. So 61% of the self-insured said they are less likely to renew with Express Scripts and 45% of the fully insured said they would be less likely to renew with Express Scripts.
So we’re very confident based on what has happened during the past month, what our survey found and from talking to employers.
EBN: When we spoke last August, you said your responsibility at that time was to prepare Walgreens to live in a world without Express Scripts come Jan. 1, 2012. How are you doing that?
Crawford: We started with the comprehensive program to help employers and patients. We’re doing everything we can to make sure people are informed. We have patients walking in the store today who have no idea that they’ve lost the choice to shop at Walgreens. They don’t know who Express Scripts is. They’re familiar with their insurance plan and their pharmacist. So they’re coming in and saying, ‘What is going on?’ And we’re educating those people on what a PBM is, how a PBM works as a middle man.
People often don’t understand that the rate we provide to the PBM is not necessarily the rate that the PBM provides to the payer. So the PBM takes a profit spread between the rate we provide to them and the rate they provide to the payer. When that profit begins to get out of whack — meaning the PBM is more profitable than the provider — then you have a relationship that is out of balance.
We’ve sent letters out from our sales team to all the major employers that have been affected by this. We’re working with benefit consultants to help them understand the value we bring. We’re working with mid-tier PBMs and health plans. We’ve got a lot of mid-tier PBMs that are out there competing against Express Scripts that will now have Walgreens in their network. That creates a differentiation between those folks. There’s very little differentiation between the large PBMs. Well, now there is a differentiator because all others will have Walgreens and Express Scripts won’t. The mid-tier PBMs can now compete against Express Scripts because they have Walgreens in the network.
EBN: Is there anything else you want to get across to our readers?
Crawford: We want to make sure all of our patients and employers know that this is very unfortunate. We think we’ve negotiated in good faith and have fair options on the table, an option that is both fair to us and Express Scripts. We are certainly in the business of filling prescriptions and, honestly, we’re always willing to talk as long as we’re getting a fair rate for our compensation. Our biggest concern is our customers. We want to take care of them and make this transition as smooth as possible and find ways to help them to be able to use Walgreens in the future.
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