CHICAGO | Mon Jan 9, 2012 5:13pm EST (Reuters) - Walgreens is going through "the worst" part of not being in Express Scripts Inc.'s network and, while the transition is difficult now, the drugstore should rebound as the year progresses, its top pharmacy executive said on Monday.

Walgreens, the largest U.S. drugstore chain, has been at odds with pharmacy benefits manager Express Scripts since June, when the companies said they could not agree on a new contract that would have started on January 1, 2012. Now, after attempts to come to new terms were not fruitful, Walgreens no longer fills prescriptions for Express Scripts' members, unless they choose to pay another way.

"Right now is the worst part for us of not being in Express Scripts' contract," Kermit Crawford, Walgreens’ president of pharmacy, health and wellness solutions and services, said as he walked around the company's newest store in Chicago.

Walgreens asserts Express Scripts is focused only on drug spending and "that's not how we think about health care," Crawford said.

Walgreens said it gave what was its best attempt at reaching an agreement back in mid-December.

"As far as I'm concerned, the ball is in their court," Crawford added.

His chain says it wants to provide a more comprehensive approach to lowering the overall cost of health care. That plan includes filling prescriptions — what it is best known for — as well as services such as monitoring patients' adherence to drug regimens, checking conditions such as diabetics' glucose levels and offering in-store and workplace clinics.

The new Chicago store, in a spot that housed a Walgreens from 1926 until 2005, features an updated pharmacy where a pharmacist sits at a desk near patients rather than behind a high counter, along with two Take Care Health clinic rooms.

While Walgreens has not spelled out exactly what rates it would accept from Express Scripts, the chain is open to taking the rate is has with Medco Health Solutions Inc. It also feels that it reached a "fair contract" with CVS Caremark Corp back in 2010 after a brief dispute, Crawford said.

Express Scripts is in the process of trying to buy Medco, a deal that awaits regulatory clearance.

Early trends in 2012 validate Express Scripts' belief that 95% of prescription volume would continue without Walgreens, Chief Financial Officer Jeff Hall said on Monday during a JPMorgan health care conference in San Francisco.

Hall said that he does not want to negotiate the Walgreens dispute in the public.

"We think cost has to go down. Walgreens thinks flat is good enough," he said.

Walgreens, for its part, said it offered to keep its rates flat for the next three years.

(Reporting by Jessica Wohl in Chicago; additional reporting by Jessica Hall in San Francisco and Lewis Krauskopf in New York; editing by Andre Grenon)

© 2010 Thomson Reuters. Click for Restrictions.


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