Tricare and Walgreens Can’t Agree on New Deal

You may have noticed signs in front of Hy-Vee and other local pharmacies, stating they proudly fill Tricare Express Scripts. This is a result of the recent fallout of Walgreens not renewing a three-year contract, which previously allowed them to fill Express Scripts.

The two companies have been trying to come to terms on a new contract since June, 2011; however, Walgreens stated they would rather lose the $5.3 billion in annual revenue than continue to fill unprofitable prescriptions.

“It’s not just the contract rates, but the terms of the contract,” said Michael Polzin, Walgreen’s Divisional Vice President. “Express Scripts wanted to have the sole right to define, what is a generic drug and what's a brand drug and that effects how we get reimbursed for the medication."

Walgreens decision to stop providing Express Scripts has already made a significant impact. Walgreens’ stocks saw first quarter earnings fall more than 4 percent and is down over half a million flu shots from the 5.6 million provided a year ago.

Recent FactSet reports have shown Walgreens with a net income drop of $36 million, even with them holding on to 97 to 99 percent of other health and prescription plans.

Walgreens avoided seeing the bigger picture of losing more sales than Express Scripts alone. This move takes away a whole demographic that would browse aisles while waiting for their prescriptions to be filled. In short, fewer customers equals fewer sales.

A few of the alternatives to filling Tricare Express Scripts at Walgreens includes:

-Major chain pharmacies, such as Walmart or Kmart

-Grocery chains such as Hy-Vee, Schnucks, and Shop ‘n Save

-Some independent pharmacies and chain pharmacies, such as CVS or the Medicine Shoppe Pharmacy

-Local hospitals


The decision to drop Express Scripts could further damage Walgreens in the long run, if their plan to purchase Medco Health Solutions Inc. goes through. This other large pharmacy and prescriptions manager could ensure further capital over time.

Kevin Pearia is a communications specialist for Veterans United Home Loans, providing service members with VA home loans and the latest news and information on their benefits.