It’s been a little over two months since pharmacy chain Walgreens announced it would be leaving Express Scripts’ pharmacy provider network. Kermit Crawford, president of Walgreens’ pharmacy, health and wellness business, sat down with EBN recently to discuss his company’s position.
EBN: What do you want our readers to know about Walgreens’ decision to withdraw from the Express Scripts network?
Crawford: When we look at this whole withdrawal, it is really a difference in philosophy. In one of the analyst conferences, the IR [investor relations] person from Express Scripts said that Walgreens is a dot on the map. We think that, at Walgreens, we have the ability to connect the dots in American health care. We have the footprint, the convenient access, the quality and the cost-effective pharmacy services, along with the relationships with patients, physicians, with health plans and employers, that make us significantly greater than a dot on a map. Those capabilities give us the ability to connect the dots within the health care map in the U.S. So those are two different philosophies.
Our strategy is around helping payers and employers lower their overall health care costs. And, I would say, many of the PBM strategies are to lower drug costs. So, for example, if a patient doesn’t take their medication, that lowers drug costs. And it is considered a good trend if you’re a PBM. But, to a payer, an employer, you’re going to pay for that on your health care cost side. So if a person with acute asthma doesn’t take an inhaler, that’s okay from a PBM perspective. But the cost is going to show up on the emergency room medical side of the business. We’re helping people to lower their overall health care costs and not just looking at drug spending.
We had a philosophical difference over having one person unilaterally define contract terms around brands and generics. We don’t think it’s something that should be unilateral. There’s a standard in the industry and let’s talk about how we focus on the standard in the industry. And we have a philosophical difference in that if you’re trying to reimburse us at a rate that is below our cost to fill, or below the national cost to fill, how do you expect us to remain in business?
EBN: So is it fair to say you’re at an impasse with Express Scripts? Or you’re not at the table negotiating at all?
Crawford: It’s fair to say we’re still at this impasse. We’re still far apart and there hasn’t been an update since our last announcement. My responsibility is [to] prepare us to live in a world without ESI come Jan. 1, 2012.
EBN: Will Express Scripts’ announced merger with Medco affect your business going forward?
Crawford: We can’t speculate on what will happen with that potential merger. Obviously, we think there will be a thorough investigation by the FTC and others and we will continue to cooperate with government and FTC as we have in the past. But I certainly can’t speculate on what is happening right now.
EBN: Assuming you don’t come to an agreement with Express Scripts, Walgreens pharmacies will no longer fill prescriptions from patients who are using the Express Scripts network, as of Jan. 1, 2012. Is that accurate?
Crawford: Yes, it is. Although it is our understanding that a number of payers and plans have the ability to contract directly with Walgreens. And we certainly would be open to directly contracting with anyone who legally has the right to still contract with us, or to insist that ESI directly contract with us for that client.
EBN: Is there anything else you want to say?
Crawford: Some of the clients really need to look at their contracts to see if they do have the ability, legally, and to see what kind of restrictions they may have, as well as understanding what type of networks they require their PBM to have. I think that a lot of people get confused when they hear there’s a 50,000-store network. Well, those 50,000-store networks include hospital pharmacies, Indian reservation pharmacies, they include all [kinds of] pharmacies. I would tell employers to make sure they’re looking at what their options are when they talk about a network without Walgreens.
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