Pharmacy contract deadline looms ; Walgreens ready to drop Express Scripts. [Columbia Daily Tribune (MO)]

With less than two weeks left before Walgreens' contract with Express Scripts expires, can the two corporate giants resolve their differences?

TIPS FOR SWITCHING:

Customers can switch their retail pharmacy by taking one of these steps:

* Take a pill bottle or a prescription to a new pharmacy of your choice. The pharmacist will call to verify the information with your physician or current pharmacy.

* Phone your current pharmacist and request that your prescription information be transferred.

* Phone your physician's office and ask that your prescription records be sent to a new pharmacy.

If not, tens of thousands of consumers relying on Express Scripts Inc. -- one of the nation's largest pharmacy benefit managers -- are likely to switch pharmacies and fill prescriptions at a location other than Walgreens, the nation's largest drugstore chain.

Walgreen Co. broke off talks with Express Scripts on June 21, saying Express Scripts had offered a 3-year contract that would have cut reimbursement rates to below the industry's average cost to fill prescriptions. Express Scripts -- which manages prescription benefits for large employers, insurers and the Defense Department -- says Walgreens has proposed dispensing rates that would eventually put the drug chain at about 20 percent above the rate paid to other contracted pharmacies.

The sides now remain at loggerheads.

"We would welcome them back to the table at any time to negotiate," said Express Scripts spokesman Thom Gross. "We would love to have them back in the network if their prices are competitive to other prices."

Michael Polzin, a Walgreens vice president, said: "We've said all along, if Express Scripts presented us a fair and competitive offer, then we would certainly be willing to consider it. ... We are still planning to be out of their network as of Jan. 1."

Some consumers say they are at the mercy of the health insurance and pharmacy titans.

"It certainly seems like several local health care players are throwing their weight around. ... It is hitting the consumer," said Dolores Dace, an elementary school teacher who lives in Florissant.

If she changes pharmacies, Dace said, she'll need to switch from a Walgreens that's nearby and open until 10 p.m. to either a supermarket or independent that is as far as three miles away.

Anthem Blue Cross and Blue Shield of Missouri, a major health plan provider, isn't waiting for a last-minute deal.

The company has sent about 110,000 letters to its plan members in Missouri who have used Walgreens for one or more prescriptions -- informing them that the health insurer plans to drop Walgreens on Dec. 31 from its network of preferred drugstores and advising them of three alternative pharmacies that nearby.

Insurers aren't the only ones scrambling to prepare for the switch. Chain stores such as Wal-Mart have posted signs welcoming new customers. Prescriptions can be filled by smaller pharmacies, specialty pharmacies, many grocery stores as well as at discount stores such as Target, Costco and Sam's Club.

Express Scripts, based in north St. Louis County, downplays the significance of the switch for consumers. If Walgreens leaves Express Scripts, "we'll still have 56,000" pharmacies "in our network," Gross said. "On average, there's one pharmacy in our network within one-half mile of any Walgreens. And over 90 percent of independent pharmacies are in our network."

Walgreen Co., based in Deerfield, Ill., has about 7,800 stores nationwide, including 6,600 drive-through pharmacies.

Securities analysts have concluded that Walgreens has more dollars to lose if the contract expires, which might push the chain to make a last-minute deal.

The current contract with Express Scripts represents about 10 percent of Walgreens' pharmacy business nationwide, or roughly $5 billion in annual sales for the drug store giant.

"We think it's in the best interest of both companies to get this resolved. It's a lot of business for both," said Judson Clark, an analyst at Edward Jones & Co. in Des Peres. "We think Express Scripts is well positioned, even in the absence of Walgreens. ... Walgreens is already losing some scripts because of the contract dispute, so this increases pressure to get a deal done."

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This article was published on page B5 of the Tuesday, December 20, 2011 edition of The Columbia Daily Tribune. Click here to Subscribe.