• WisBusiness

Wednesday, January 18, 2012

In pharmacies, consumer choice should trump profit

By George Klaetsch
Most grocery stores stock an entire aisle of shelves with breakfast cereal -- and for good reason. Consumers like to choose for themselves based on price, quality, and other factors. That kind of choice and competition among brands is also good for the consumer because it leads to lower costs and improved goods.

But what if a grocery store middleman decided to stop carrying the top-selling brand? That might sound absurd, but it is essentially what is happening in the retail pharmacy market. A company called Express Scripts has failed to negotiate a fair contract with Walgreens, and as a result thousands of families in Wisconsin no longer are able to get their prescriptions filled at the nation’s leading community pharmacy.

Reduced access to Walgreens will be detrimental to consumers in a number of ways. First, it makes seeking pharmacy care more difficult. Patients whose prescription drug benefits are administered through Express Scripts may have to travel greater distances to find a pharmacy. It also means patients will be denied access to the pharmacists they trust and with whom they have longstanding relationships. With less competition in the market, it additionally leads to consumers being vulnerable to price increases.

So why is a company most families have never heard of preventing so many Wisconsinites from using the pharmacy of their choice? Simply put: profits. Express Scripts is what is known as a pharmacy benefit manager. It brokers agreements for health insurance plans that dictate the price and availability of prescription drugs. It’s a profitable business -- Express Scripts’ profits per prescription have grown at a rate of 13-15 percent per year while health care costs to the average consumer have continued to rise.

In negotiating a new agreement, Walgreens offered to keep its rates flat for the next three years. Express Scripts, however, sought to use its market power to slash reimbursement rates to Walgreens below the industry average. As a result of that failure to negotiate fairly, Express Scripts as of January 1 has reduced consumer choice and shut off access to millions of Americans’ pharmacy of choice.

Express Scripts says patients can simply choose another place to get their prescriptions, just like they can start eating a different brand of breakfast cereal. That may be easy for a middleman to say, but to those who work directly with consumers, it means consumers are not getting the product they want at a price they deem fair. That is not acceptable. Express Scripts should put patients above profits and get back to the negotiating table.

-- Klaetsch is executive director of the Wisconsin Coalition for Consumer Choice.


Comments: 15

At January 19, 2012 at 5:06 AM, Blogger Realistic RPh said...

Fact is Walgreens consistently demands to be paid ABOVE market rate, and refused to accept payment for what Express is paying every other pharmacy, including those that do not have the leverage of purchasing and infrastructure that Walgreens has. Roll back the clock 1 year, and you'll see headlines of a very similar discussion, except remove Express Scripts and insert Caremark. Caremark didn't call Walgreens arrogant bluff, Express Scripts did. This will hopefully teach Walgreens a valuable lesson, despite their marketing blitz, the real value (in terms of health outcomes) is no better than any other pharmacy and they should grow used to being paid as much.

At January 19, 2012 at 5:29 PM, Blogger Unknown said...

In Walgreens, consumer choice should trump profit. Walgreens went after the profits asking Express Scripts 30% more than they pay other pharmaceutical retailers. Walgreens made it difficult to access prescriptions.

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