The National Association of Chain Drug Stores is hosting its annual RX Impact Day in Washington, DC this week. Its official, plain vanilla agenda lays out two days full of member events, Capitol Hill briefings and appointments with key Members of Congress who are concerned with pharmacy policy issues – exactly the program you’d expect from a trade association.
Except that the benign and standard “Fly-in” Agenda belies a battle royale that could line NACDS members opposite each other, with government third parties determining winning and losing teams.
The firestorm stirred up by NACDS has dragged in the usual suspects – federal agencies, state lawmakers, governors and federal lawmakers. It has also engendered a heated discussion of the role of the free market in retail delivery of medications, the degree in which government should dictate such mechanisms, and whether pharmacy retailers will support their trade association’s efforts to back one of its largest members, or choose to keep their own bottom lines as first consideration.
Throughout 2011, Walgreens and Express Scripts, one of the country’s largest pharmacy benefit managers (PBMs), had a very public falling out over medication pricing. In a flurry of corporate “he said/she said,” Express Scripts claimed Walgreens wanted to be paid 20 – 30% more than its competitors; Walgreens denied the accusation. It is clear, however, that Walgreens was unhappy with its slice of the pharmaceutical pie as the company dropped its contract with Express Scripts on January 1, 2012.
This is why every time you go into your local grocery, big box, drug chain or independent pharmacy lately, you are greeted with cheerful point of sale materials saying “We Welcome Express Scripts Customers!” “Transfer your prescriptions here and get a free (fill in the blank) or take (fill in amount) off your bill at checkout!”
Walgreens’ punt of 90 million prescriptions valued at roughly $5.3B has not just been a boon to companies making retail signage, but to Walgreens’ competitors. CVS/Caremark raised earnings in its last quarterly report in large part due to attracting former Walgreens customers. In addition to personal shopping experiences, news reports tell the same story for independent pharmacies and other pharmaceutical retailers – a pickup of new customers formerly with Walgreens.
But a number of Walgreens’ competitors benefitting from Walgreens’ jump from Express Scripts are also paying members of NACDS. Uh-oh.
The backdrop of this pharmaceutical soap opera is the proposed merger of Express Scripts with another PBM, Medco, which has been a hot button for NACDS since early 2011. NACDS opposes the merger and has an affiliated website dedicated solely to defeating it.
Although there is no written reference to it whatsoever on its RX Impact Day Agenda, NACDS President and CEO Steve Anderson recently noted, “No issues are higher on NACDS’ list of priorities than urging members of Congress to express to the Federal Trade Commission their concerns and opposition to the proposed Express Scripts and Medco merger, and advocating for legislation to regulate pharmacy benefit managers.”
Competing constituencies abound. On Capitol Hill and in state governments, Blue and Red teams are generally lined up as usual with Democrats favoring increased interference and regulation while Republicans oppose it. But some Democrats who would normally be on Team Regulate are facing a challenge: Al Sharpton, leading the class warfare and racial discrimination constituency, has loudly attacked Walgreens for what he calls the company’s telling “underserved, low-income communities that they are essentially second-class citizens and undesired as Walgreens customers.” Ouch.
Alliances are also challenged by which public servant has which home office of which player in his or her state. Then there are PBM companies and their lobby, who clearly do not want or need more regulation than that with which they are already burdened.
It appears this week’s event really is a fly-in for Walgreens. Fair enough. But CVS, Rite Aid, chains Giant and Safeway and their brands and many other pharmacy retailers also pay membership dues to the National Association of Chain Drug Stores. Are they really going to take a stand for a competitor in a corporate cat fight, especially one that leaves their cash registers ringing with the business of that competitor’s former customers?
Consumers and public policy advocates need to keep their eyes on this mess. NACDS activities could easily throw regulators and legislators into a corporate version of March Madness brackets, leaving consumers on the sidelines.
Patients alone should decide where they shop for their medicines, and companies who keep their profit margins first best serve their shareholders, employees and customers.
The question is, who has that square?
Except that the benign and standard “Fly-in” Agenda belies a battle royale that could line NACDS members opposite each other, with government third parties determining winning and losing teams.
The firestorm stirred up by NACDS has dragged in the usual suspects – federal agencies, state lawmakers, governors and federal lawmakers. It has also engendered a heated discussion of the role of the free market in retail delivery of medications, the degree in which government should dictate such mechanisms, and whether pharmacy retailers will support their trade association’s efforts to back one of its largest members, or choose to keep their own bottom lines as first consideration.
Throughout 2011, Walgreens and Express Scripts, one of the country’s largest pharmacy benefit managers (PBMs), had a very public falling out over medication pricing. In a flurry of corporate “he said/she said,” Express Scripts claimed Walgreens wanted to be paid 20 – 30% more than its competitors; Walgreens denied the accusation. It is clear, however, that Walgreens was unhappy with its slice of the pharmaceutical pie as the company dropped its contract with Express Scripts on January 1, 2012.
This is why every time you go into your local grocery, big box, drug chain or independent pharmacy lately, you are greeted with cheerful point of sale materials saying “We Welcome Express Scripts Customers!” “Transfer your prescriptions here and get a free (fill in the blank) or take (fill in amount) off your bill at checkout!”
Walgreens’ punt of 90 million prescriptions valued at roughly $5.3B has not just been a boon to companies making retail signage, but to Walgreens’ competitors. CVS/Caremark raised earnings in its last quarterly report in large part due to attracting former Walgreens customers. In addition to personal shopping experiences, news reports tell the same story for independent pharmacies and other pharmaceutical retailers – a pickup of new customers formerly with Walgreens.
But a number of Walgreens’ competitors benefitting from Walgreens’ jump from Express Scripts are also paying members of NACDS. Uh-oh.
The backdrop of this pharmaceutical soap opera is the proposed merger of Express Scripts with another PBM, Medco, which has been a hot button for NACDS since early 2011. NACDS opposes the merger and has an affiliated website dedicated solely to defeating it.
Although there is no written reference to it whatsoever on its RX Impact Day Agenda, NACDS President and CEO Steve Anderson recently noted, “No issues are higher on NACDS’ list of priorities than urging members of Congress to express to the Federal Trade Commission their concerns and opposition to the proposed Express Scripts and Medco merger, and advocating for legislation to regulate pharmacy benefit managers.”
Competing constituencies abound. On Capitol Hill and in state governments, Blue and Red teams are generally lined up as usual with Democrats favoring increased interference and regulation while Republicans oppose it. But some Democrats who would normally be on Team Regulate are facing a challenge: Al Sharpton, leading the class warfare and racial discrimination constituency, has loudly attacked Walgreens for what he calls the company’s telling “underserved, low-income communities that they are essentially second-class citizens and undesired as Walgreens customers.” Ouch.
Alliances are also challenged by which public servant has which home office of which player in his or her state. Then there are PBM companies and their lobby, who clearly do not want or need more regulation than that with which they are already burdened.
It appears this week’s event really is a fly-in for Walgreens. Fair enough. But CVS, Rite Aid, chains Giant and Safeway and their brands and many other pharmacy retailers also pay membership dues to the National Association of Chain Drug Stores. Are they really going to take a stand for a competitor in a corporate cat fight, especially one that leaves their cash registers ringing with the business of that competitor’s former customers?
Consumers and public policy advocates need to keep their eyes on this mess. NACDS activities could easily throw regulators and legislators into a corporate version of March Madness brackets, leaving consumers on the sidelines.
Patients alone should decide where they shop for their medicines, and companies who keep their profit margins first best serve their shareholders, employees and customers.
The question is, who has that square?
COMMENTS
Please let us know if you're having issues with commenting.