$WAG and $ESRX Reach New Pharmacy Deal!

Wow!  Finally! 

Those are my immediate reactions.  I just saw the news that Walgreens and Express Scripts have reached a new pharmacy deal effective 9/1/12.  I’m sure there are lots of consumers that will be happy about that and a few competitive PBMs that will be disappointed. 

A few things that this makes me think about:

• The Walgreen’s shareholders will be happy.
• Both parties can claim some victory by holding out so long.
• I imagine that the limited network was working ok, but there wasn’t huge adoption.  It was probably also an issue in RFPs and with consultants.
• Other PBMs were likely using this in selling against Express Scripts so they’ll be disappointed.
• Obviously, the Medco contract with Walgreens was the big catalyst here.  Letting that transition to a point where they didn’t get any Medco or Express Scripts patients would be a disaster.
• Will this change Walgreens collaboration with the NCPA against the PBMs and mail order or is that just the natural conflict here?

The biggest battle now will be around customer retention and winback.  Can Walgreens get their old Express Scripts patients to come back?  Can CVS and others hold on to the patients?  This will really test the theory about customer loyalty in the pharmacy space. 

The other interesting thing here is that this pushed Walgreens to really re-evaluate their strategy and market positioning.  Will they emerge as as stronger and different company because of this 9 month period.  I would think so, but that is still TBD.