Opportunists vs. Solidarity

With the Walgreens and Express Scripts dispute unresolved, you are certainly seeing more of an opportunistic attitude in pharmacies than one of solidarity.  Maybe this shouldn’t be a surprise, but early on, I thought that the pharmacy groups would see Walgreens as their “leader” standing up to the large PBM.  If the largest retailer can’t get negotiating leverage over the PBM, can anyone?

Now, if you go into my local grocery store (Dierbergs), you see signs about moving your prescriptions to them from Walgreens before it’s too late.  You see and hear videos playing throughout the store talking about how to move your prescriptions and how easy it is.

CVS Caremark is predicting that it could see as many as 23M prescriptions move from Walgreens to CVS stores.

I’m certainly a fan of preferred or limited networks although I’m not sure I ever imagined a scenario where one PBM would totally exclude one of the big two retailers.  I always imagined a scenario where you were playing them off each other and letting the client choose which one(s) to exclude.

You can see in the new whitepaper by Walgreens that they point out several things:

  • The savings  being offered / created is likely not enough for clients to want to exclude Walgreens and create the disruption.
  • Clients who can include Walgreens are doing so and others would like to or believe they can.
  • If Walgreens is excluded long-term, self-funded clients will be more likely to consider other PBMs.
  • Many people still think this will get resolved in 2011 or by early 2012.

This brings up two other discussion topics:

  1. Will they come back?  If the disruption happens (or has already happened), will consumers come back to Walgreens once they are back in the network?  This will be a true test of satisfaction, branding, and many other efforts.  On the flipside, the other retailers should be spending real effort welcoming and trying to retain the new consumers so they don’t boomerang back.
  2. Has the pressure shifted from Walgreens to Express Scripts?  Depending on the timing, Walgreens will have felt most of their pain by mid-January.  At that point, the pressure (IMHO) shifts to Express Scripts.  Will they want to go through their 2012 selling season without Walgreens in their network, a major acquisition in the works, and any other potential distractions?  I wouldn’t.

One Response to “Opportunists vs. Solidarity”

  1. The irony of the conflict between Walgreen’s and Express Scripts is the manner in which Express Scripts typically charges its customers employs “spread pricing” which is most prevalent with generic drugs. Therefore, we believe the conflict between these two organizations has little to do with what Express Scripts pays Walgreen’s for prescriptions, but more to do with the margins derived through what Express Scripts charges their customers and Express Scripts bottom line.

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