Pharmacy Industry News: Walgreens discontinues negotiations; PBM Express Scripts shocked
Walgreens discontinues negotiations; PBM Express Scripts shocked
After Walgreens made its contract dispute with Express Scripts public onTuesday morning, the pharmacy benefit manager stated it is open to continued negotiations with Walgreens.
“In these challenging economic times, it is critical that we all work together to keep medicines affordable and accessible,” Express Scripts’ chairman and CEO George Paz said. “It is shocking to us that Walgreens would back away from the table with six months to go in the current agreement, especially considering that negotiations are part of the normal course of business.”
In response to the news, Credit Suisse research analyst Ed Kelly said that the general consensus is that the issues will be settled.
“Walgreens is once again fighting to protect the longer-term profitability of its pharmacy business, similar to the dispute with CVS Caremark last year,” Kelly wrote in a research note released Wednesday morning. “We believe the company’s dispute with Express Scripts will be resolved shortly, as the lack of a deal would clearly harm both companies.”
If renewed negotiations don’t materialize, the parting of the ways between Walgreens and Express Scripts would have an estimated 50 cents per share impact on Walgreens’ earnings, Kelly noted, and Express Scripts would be placed at a competitive disadvantage, versus other PBMs without the almost 8,000 Walgreens and Duane Reade pharmacy locations in its network.
Credit Suisse maintained its “Outperform” rating for Walgreens, suggesting that investors taking advantage of any volatility with stock prices now should reap the benefits by the first quarter of 2012 if Walgreens hits current earnings projections.
In its statement, Express Scripts challenged Walgreens’ assertion that the proposed reimbursement rates were below the published industry average cost to provide each prescription. “Over the next three years, the costs of non-specialty branded medications are projected to increase approximately 10% per year [and] more than 30% over three years, the costs of branded specialty medications are projected to increase more than 14% per year [and] nearly 50% over three years, and more than $60 billion worth of branded medications will lose patent protection, opening the door to more affordable generic alternatives,” Paz stated.
However, the PBM is drawing its own line in the sand in preparing to continue on without Walgreens. “On average, another pharmacy within the Express Scripts network is within one-half mile of a Walgreens pharmacy. Even without Walgreens in our network, we meet all client guarantees for access.”
Guild warned against seeking change to pharmacy award
Plans to get legislation changed to enable pharmacy owners to employ high-school students for minimum shifts of 1.5 hours will be fought, pharmacy employee union, the Pharmacy Division of APMESA (PDA) believes.
A PDA spokesperson told Pharmacy News that the Pharmacy Guild of Australia’s previous arguments that community pharmacy was not part of the retail industry would be a significant stumbling block in having the Pharmacy Industry Award changed to match the amended retail sector award.
Alliance Data’s LoyaltyOne Business Signs Long-Term Renewal With Top-Ten AIR MILES® Sponsor, The Jean Coutu Group; Quebec’s Drugstore Retail Leader and One of Canada’s Leading Pharmacy Chains
PRNewswire via COMTEX/ — Alliance Data Systems Corporation ADS
-0.26% , a leading
provider of loyalty and marketing solutions derived from transaction-rich data, announced that its Canadian coalition loyalty business has signed a long-term renewal with The Jean Coutu Group (PJC) Inc. CA:PJC.A
-0.09% .
The multi-year agreement provides for The Jean Coutu Group to remain a sponsor in LoyaltyOne’s AIR MILES® Reward Program as the exclusive pharmacy retailer in Quebec. Jean Coutu has been a sponsor in the program since 2003.
The Jean Coutu Group is the franchisor of one of the leading pharmacy chains in Canada with 389 franchised stores in Quebec, Ontario and New Brunswick under the banners PJC Jean Coutu, PJC Clinique, PJC Jean Coutu Sante and PJC Jean Coutu Sante Beaute. For Fiscal 2011, revenues were (CDN) $2.598 billion.
The AIR MILES® Reward Program is Canada’s premier coalition loyalty program, with approximately two-thirds of Canadian households actively collecting reward miles. AIR MILES collectors earn reward miles at more than 100 leading brand-name sponsors representing thousands of retail and service locations across Canada. AIR MILES reward miles can be redeemed for more than 1,200 different rewards, such as travel, movie passes, entertainment attractions, and electronic merchandise.
“A significant sponsor in our loyalty coalition, Jean Coutu’s continued focus on ensuring marketing concepts are industry leading and meet customer expectations has provided it with a competitive advantage in the retail pharmacy category and continues to have a positive impact on revenues and customer loyalty,” said Bryan Pearson, president of LoyaltyOne. “With anticipated increases in consumer spending on pharmacy, health-related and beauty products, we will continue to work closely with Jean Coutu to design and implement targeted consumer marketing initiatives that grow network stores sales and increase wholesaler revenue and reward miles issuance.”
“Not only does the AIR MILES Program allow us to attract customers and ensure their loyalty, but it is also a source of information on our customers and their purchasing profiles,” said Alain Lafortune, executive vice president, Purchasing and Marketing, The Jean Coutu Group. “This strategic marketing tool allows us to differentiate ourselves through targeted marketing initiatives but also to adapt our strategies in accordance to the real and unique purchasing profiles of our customers.”
About The Jean Coutu Group
The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Company operates a network of 389 franchised stores in Canada located in the provinces of Quebec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Sante and PJC Sante Beaute, and employs more than 18,000 people. Furthermore, as of December 2007, the Jean Coutu Group owns Pro Doc Ltd (“Pro Doc”), a Quebec-based subsidiary and manufacturer of generic drugs. The Company also holds a significant interest in Rite Aid Corporation (“Rite Aid”) a national chain of drugstores in the United States with nearly 4,700 drugstores in 31 states and the District of Columbia.
About Alliance Data
Alliance Data® ADS
-0.26% and its combined businesses is North America’s largest and
most comprehensive provider of transaction-based, data-driven marketing and loyalty solutions serving large, consumer-based industries. The Company creates and deploys customized solutions, enhancing the critical customer marketing experience; the result is measurably changing consumer behavior while driving business growth and profitability for some of today’s most recognizable brands. Alliance Data helps its clients create and increase customer loyalty through solutions that engage millions of customers each day across multiple touch points using traditional, digital, mobile and other emerging technologies. Headquartered in Dallas, Alliance Data employs approximately 8,500 associates at more than 50 locations worldwide.
Alliance Data is a leading provider of marketing-driven credit solutions, and is the parent company of Epsilon®, a leading provider of multi-channel, data-driven technologies and marketing services, and LoyaltyOne®, which owns and operates the AIR MILES® Reward Program, Canada’s premier coalition loyalty program. For more information about the company, visit our web site, www.AllianceData.com , or you can follow us on Twitter at www.Twitter.com/AllianceData .
Alliance Data’s Safe Harbor Statement/Forward Looking Statements
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. Although we believe that the expectations reflected in the forward-looking statements are reasonable, these forward-looking statements are subject to risks, uncertainties and assumptions, including the anticipated effects of the CARD Act, potential effects of the Epsilon data incident, and those discussed in our filings with the Securities and Exchange Commission.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements contained in this presentation reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this presentation regarding Alliance Data Systems Corporation’s business which are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the most recently ended fiscal year. Risk factors may be updated in Item 1A in each of the Company’s Quarterly Reports on Form 10-Q for each quarterly period subsequent to the Company’s most recent Form 10-K.