Pharmacy Industry News: Walgreens spat sends millions to new pharmacies
Walgreens spat sends millions to new pharmacies
San Francisco resident Anne Crawford has been putting off getting her prescriptions filled because she was hoping a contract dispute between Walgreen Co. and a firm that handles drug benefits for millions of customers would be resolved.
But that has not been the case. Negotiations broke down and since Jan. 1, Walgreens, the nation’s largest drugstore chain, has refused to do business with Express Scripts Inc., a company that manages the drug benefits for employers, insurers and other groups.
As a result, tens of thousands of Californians, including members of one of California’s largest insurers, Anthem Blue Cross, have been unable to get their prescriptions filled at Walgreens, by far the largest pharmacy chain in the Bay Area.
Inconvenient alternatives
“I have some prescriptions I have to refill. I’m not going to be able to put it off any longer, so I’m going to have to move to a different pharmacy,” said Crawford, 46, an Anthem member who lives in San Francisco’s Glen Park neighborhood. She said there is no convenient alternative in her insurer’s pharmacy network near where she lives or works.
“A situation like this is pretty much unprecedented in the industry,” said Walgreens spokesman Michael Polzin.
The dispute, which is affecting million of patients nationwide, is particularly being felt in the Bay Area, where Walgreens has 40 percent of the market share. CVS Caremark is a distant second with 27 percent, according to Chain Drug Review, an industry publication.
Pharmacy benefit managers like Express Scripts serve as the middlemen between drug makers and pharmacies and their customers, which include health insurers, employers and other groups. With the goal of saving money for their customers, these companies negotiate prices for drugs and the rates pharmacies will be reimbursed for filling prescriptions.
Reimbursement at issue
Express Scripts and Walgreens have been locked in a battle for the past year over how much the pharmacy benefit manager would reimburse the pharmacies. Walgreens had been filling about 88 million prescriptions a year nationwide for Express Scripts.
Officials from Express Scripts say the drugstore chain wanted too much – as much as 20 percent higher than what other pharmacies in the network agreed to accept. Walgreens’ executives have denied that figure and accused the benefit manager of offering less than the industry average cost to provide a prescription.
The dispute has affected about 10 percent of Walgreens’ more than 60 million pharmacy customers. These include people in the Tricare program, which covers members of the military and their dependents, as well as WellPoint Inc., the parent company of Anthem Blue Cross in California, and most of the employers that use the pharmacy benefit manager.
Terms of agreement
Express Scripts spokesman Brian Henry said the company would be willing to accept Walgreens back into the network, but only “at rates and terms that are right for our clients and consistent with other pharmacies.”
The company has more than 56,000 pharmacies in its nationwide network even without Walgreens, and most customers have an alternative option within a half mile, Henry said.
Other pharmacies, including CVS and Safeway and to a lesser extent Costco, have reported increased business since the beginning of the year. Officials from the pharmacies all welcomed the new customers.
But Dr. Edward Machtinger, director of the women’s HIV program at UCSF, said switching pharmacies may disrupt care for people who are both poor and sick. He said the dispute affects patients in Anthem’s Medi-Cal managed care plan.
“These are chronically ill, socially and physically stressed people who now suddenly go to the pharmacy and find out they can’t pick up any of their prescriptions,” he said. “They are often not equipped to figure out how to have those prescriptions transferred and filled at alternative pharmacies.”
Am I affected?
If your prescription benefit card says “Express Scripts,” you may be affected by the contract dispute between Walgreens and the pharmacy benefit manager.
Next IT Expands Bench of Pharmaceutical Industry Expertise
Next IT, a leading provider of Intelligent Virtual Assistants for business, is expanding its sales team to address the significant customer support needs of the healthcare and pharmaceutical industries. Victor Morrison and Mitch Lawrence, formerly of Teva Pharmaceutical Industries, bring valuable experience and perspective to tailor online self-service solutions that improve pharmaceutical compliance and healthcare outcomes.
During his 22 years at Teva — the world’s largest manufacturer of generic drugs and a world leader in the treatment of multiple sclerosis (MS) — Victor played a critical role in defining Teva’s vision for pharmacy and specialty pharmacy interaction. He also conceived and developed the parameters for the clinical study of an enhanced interface between MS patients, specialty pharmacies and physicians and its impact on compliance, adherence and, most importantly, patient outcomes.
“Next IT’s Human Emulation Technology will transform the patient experience,” says Mr. Morrison. “It gives patients the ability to interact with a virtual assistant knowledgeable about them, their disease and their therapy, 24/7, via the web, smartphone or SMS. From the payer perspective, healthcare entities will have unlimited opportunities to engage the patient with dosing reminders, education, coaching and counseling and, importantly, to move the interaction to a live pharmacist or nurse when appropriate. Compliance and adherence to medication regimens should be dramatically increased, which will lead to better outcomes while decreasing the overall cost of care.”
Mitch Lawrence, with nearly 27 years of experience in sales gained in medical, pharmaceutical and information technology, is a born leader with a knack for the creation and development of highly effective sales and account-management teams. Most recently, he was accountable for all of Teva’s formulary, contracting and brand initiatives with third-party payer accounts in the Western U.S., overseeing and training an award-winning staff of account managers.
“Advancing Next IT’s technology across the healthcare industry is an exciting prospect. The potential benefit is huge,” says Lawrence. “Conversational interfaces allow people to use their own words to find the exact piece of information they’re looking for, allowing electronically stored resources to be of much greater practical value because they’re easier to use. I can see widespread applications, from guiding people through insurance billing forms to answering questions about medications and more. It truly gives patients a powerful tool for efficiently and effectively serving themselves.”
Rite-Aid in Allston to close in spring; rival pharmacy CVS to open in fall
Retailer CVS Corporation plans to open a new 13,000 square-foot convenience store with a drive-thru pharmacy in an Allston shopping plaza that will take over the space of an existing Rite-Aid store by the coming fall.
The Woonsocket, R.I.-based chain plans to begin renovations of the building within the retail plaza along Brighton Avenue by late spring, company spokesman Mike DeAngelis said by phone.
“We like that location because it’s near the corner of Brighton Avenue and Cambridge Street,” and also near where Brighton and Harvard Avenues intersect, making it “conveniently accessible to shoppers,” the CVS spokesman said.
Spokesman Eric Harkreader confirmed that rival pharmacy chain Rite-Aid plans to vacate the retail spot this spring after the company was unable to come to terms with the property’s landlord to extend its lease there.
The spokesmen for each of the two companies declined last week to provide more specific dates for their respective closing, renovation and opening plans. The Rite-Aid spokesman said he could not provide a more specific timeline for that store’s closure because those details have not yet been finalized.
The shopping plaza is comprised of five commercially-zoned parcels that together account for about 67,200 square feet, or about 1.5 acres, of property worth a combined $4.15-million, city assessing records show. All five plots and their buildings are owned by Hallston Realty Associates, LLC, according to the city and state records.
According to filings with the state, that entity is owned and managed in part by two prominent developers John L. Hall II, president of Suffolk Downs race track, and Richard L. Friedman, whose company transformed the former Charles Street Jail into the luxury Liberty Hotel and who regularly hosted President Clinton and his family at his estate on Martha’s Vineyard in the 1990s.
Messages left for Hall at downtown-based Hall Properties, Inc., where he is a principal, and for Friedman at Cambridge-based Carpenter & Company, Inc., where he is president and COO, were not returned last week.
Norwood-based company HallKeen, which manages the Allston shopping plaza, also did not return messages seeking comment about the impending exit of Rite-Aid and arrival of CVS and about an adjacent building in that plaza that was demolished recently, about 15 months after the city labeled it among about 150 properties fire officials deemed unsafe and just over three years after a fire forced the closure of the then-decade-old, flagship location of Brazilian restaurant chain Cafe Belo, which for a while afterward ran a small, take-out only location in another spot in that plaza.
And, prior to a Globe review about the local towing industry, neither Hall nor Friedman had returned phone messages for a story published last month that detailed the staggering number of vehicles that have been towed from the Allston shopping plaza where CVS plans to open.
That Globe review found that roughly 3,550 vehicles over a 31-month span from spring 2009 to fall 2011 were towed for illegally using the Allston shopping plaza’s 63-space lot, more than twice as many cars than at any other address in Boston over that same timeframe. The second-leading location was at the South Bay mall in Dorchester, a lot with more than 30 times as many parking spots.
The CVS spokesman declined to comment last week about the lot’s parking and towing situation since the retail company does not own or lease any of the plaza’s parking area. Two of the plaza’s current tenants, Rite Aid and Dunkin’ Donuts, said through spokesmen in last month’s Globe story that they do not request that cars be towed.
The Globe’s review also found that Robert’s Towing Inc., which owns an impound yard one mile away in Brighton, generated an estimated $465,000 in cash from towing cars from the Allston shopping plaza, assuming the company collected the $131 fee they charge per tow.
The towing company’s trucks were watched by Globe reporters patrolling the customer-only parking lot, hiding with their lights off behind a building as they were hunting for cars to tow.