By Sarah Varney
As of January 1, Californians who go to Walgreens to get their prescriptions filled may have been in for a surprise. Because of a contract dispute between Walgreens, the nation’s largest drugstore chain, and the company that manages prescriptions for Anthem Blue Cross health insurance, many customers will have to find a new pharmacy.
To find out if you’re affected by the dispute, you should check the back of your insurance card. If it says “Express Scripts,” you can no longer fill your prescription at Walgreens under your insurance plan. Express Scripts is a pharmacy benefit manager or PBM. PBMs negotiate prices for drugs and oversee prescription drug programs for health insurance companies, governments, unions and others.
Express Scripts is one of the nation’s largest PBMs. Its clients include Anthem Blue Cross. The two companies had been negotiating a new contract to keep Walgreens in its network, but Express Scripts spokesman Brian Henry says Walgreens was asking for too much money. "Their rates and terms as they currently stand would be as much as 20 percent more," Henry said, "and our clients aren't willing to pay that premium for basically the same service you can get at many other thousands of other pharmacies."
But Walgreens' spokesman Michael Polzin adamantly denies the charge. "We did not propose any increase in our rate," he said. "So there would not be any significant savings to Express Scripts clients for excluding Walgreens from their network. So it's really a situation of all pain and no gain for their clients."
Health care experts are somewhat befuddled by the stand off. Sean Brandle is a pharmacy benefit expert at the Segal Company, a New York-based employer benefits firm. He says tussles between pharmacy chains and PBMs are pretty typical. But he also said he’s surprised Walgreens would walk away from so many pharmacy customers and all that in-store foot traffic. Express Scripts says of the 750 million prescriptions it processed last year, about 90 million were filled at Walgreens.
Caught in the middle of the dispute is one of California’s biggest health insurance companies, Anthem Blue Cross, and its millions of customers like San Francisco resident David Forer. There’s a Walgreens just down the street from his downtown San Francisco office, and he used to stop in weekly to pick up insulin for his daughter who has Type 1 diabetes. "They knew me on a first name basis," Forer said. “They wouldn’t even ask me my name when I came up. I would just go and get the prescriptions. They would ask how she was doing, and now I can’t go there anymore.”
Forer has switched his family’s prescriptions to a CVS pharmacy. But while CVS is a national chain, it’s not as omnipresent on the city’s streets as Walgreens. "I imagine there will be huge line ups because there are very few CVSs and so many people are going to have to switch to CVS so this is a major inconvenience," Forer added.
Anthem Blue Cross says throughout the state there is another in-network pharmacy typically within a half a mile of a Walgreens, and the company is trying to help customers make the transition.
Pharmacy benefit expert Brandel says there could be an upside for all the headache. Brandel says Express Scripts should be able to negotiate steeper discounts with CVS and other pharmacies since excluding Walgreens will mean more business for them.
Listen to Sarah Varney's report: