Walgreens Loses Tricare Prescriptions

A three-year contract allowing Walgreens to sell Express Scripts prescriptions, the company that services Tricare, has officially come to an end. The two companies had attempted to agree on a new contract since June, 2011, but Walgreens stated it would rather lose the $5.3 billion in annual revenue rather than continuing to fill unprofitable prescriptions.

Walgreens loses Tricare prescriptions.Walgreens will now lose Tricare, which serves military members and their families, and WellPoint Inc., the largest U.S. health insurer, based on membership.

The decision to stop doing business with Express Scripts has already had a significant effect on Walgreens stocks. They saw first-quarter earnings fall more than 4 percent due in part to a slow flu season and the split from Express Scripts. Walgreens administered 5 million flu shots through Nov. 30 compared with 5.6 million a year ago.

Walgreens is attempting to hold on to as many prescriptions as possible by making its own arrangements with companies and health plans. The company says it expects to keep between 97 percent and 99 percent of its 2011 prescription volume, though FactSet reports they have already seen a net income drop of $36 million.

Walgreens could lose more sales than just Express Scripts prescription, with less customers browsing the aisles while waiting on their prescriptions to be filled.

Express Scripts could continue to damage Walgreens’ budget if they successfully purchase Medco Health Solutions Inc., another large pharmacy benefits and prescriptions manager. If that deal goes through, Walgreens may lose significantly more capital over time.

Some alternatives means of filling prescriptions for Tricare users are:

  • Grocery stores such as Schnucks, Shop ‘n Save and Hyvee
  • Major retail chain pharmacies such as Walmart or Kmart
  • Some independent and chain pharmacies, such as the Medicine Shoppe Pharmacy or CVS
  • Local hospitals
Photo thanks to Michael Kappel under creative commons license on Flickr.