I am sure most of you have heard that Walgreen’s stopped taking prescriptions from insurance giant Express Scripts last month. Walgreens was unhappy with the contract that was tendered by Express Scripts and decided to pull out of their network. In my opinion this episode highlights what I consider to be the “too big to fail” piece of the pharmacy industry. Two giants - one the biggest drugstore chain and the other one of the three largest prescription insurance companies in the country can’t play nice. So who actually gets hurt? Patients and customers!
Something you may not have heard was that Express Scripts is also currently trying to merge with Medco, another behemoth prescription insurance company. If the FTC were to approve the merger, the new company would control over one third of all prescriptions filled in the United States! This after the FTC in 2007, approved CVS (the 2nd largest drugstore chain) to buy Caremark, currently the 2nd largest prescription insurance company. To this day I do not understand how anyone thought it was a good idea to have a retailer and a supplier of the magnitude of CVS and Caremark merge while figuring it was going to benefit the consumer!
As witnessed with the financial meltdown in 2008, bigger is definitely not always better!