Bloomberg News

Walgreen Wins Ruling in Contract Fight With Express Scripts

October 19, 2011

(Adds excerpt from Express Scripts complaint in third paragraph.)

Oct. 19 (Bloomberg) -- Walgreen Co. said it won a ruling in its contract dispute with Express Scripts Inc. when an arbitrator refused to order the drug chain to stop making allegedly false and misleading statements.

Both sides declined to elaborate on the order that Express Scripts was seeking, and the arbitration is private.

In a lawsuit against Walgreen that was later sent to arbitration, Express Scripts accused the chain of distributing “a wave of marketing and promotional materials which disparage Express Scripts and falsely state that, after Dec. 31, 2011, Walgreens will be unable to fill prescriptions for Express Scripts members.”

“This is false and highly misleading because nothing will prohibit Walgreens from continuing to fill valid prescriptions for such members after Dec. 31, 2011, even if Walgreens is not a part of Express Scripts’ pharmacy network,” the company said in the complaint.

Express Scripts manages pharmacy benefit programs for private employers, unions and government health plans. Walgreen fills prescriptions for about 2.5 million Express Scripts’ Medicare Part D participants, according to the federal court complaint, filed last month. The contract expires at the end of this year.

Negotiations Stopped

The drugstore chain terminated renewal negotiations and “launched an aggressive campaign to disparage Express Scripts” and promote other programs, the company alleged in its complaint.

Walgreen, based in Deerfield, Illinois, the largest U.S. drugstore chain, said today in a statement that the arbitrator “issued a ruling denying the parties’ requests for preliminary injunctive relief.”

“The arbitrator will consider the underlying merits of the parties’ claims at a future date,” Walgreen said.

The arbitration proceedings and the arbitrator’s Oct. 16 ruling are confidential, Walgreen lawyer Peter Bensinger said today in a telephone interview.

“The communications that were at issue, as reflected in the public complaint, have been dealt with and are not enjoined,” Bensinger said.

Brian Henry, an Express Scripts spokesman, declined to comment on the ruling.

“We still think that Walgreens has crossed a line by putting our clients’ employees and members in the middle of our dispute and is not negotiating in good faith to resolve our differences,” he said by e-mail.

The case is Express Scripts Inc. v. Walgreen Co., 1:11-cv- 06223, U.S. District court, Northern District of Illinois (Chicago).

--With assistance from Chris Burritt in Greensboro and Molly Peterson in Washington. Editors: Andrew Dunn, Charles Carter

To contact the reporters on this story: Andrew Harris in Chicago at aharris16@bloomberg.net; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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