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Walgreens, Express Scripts at a contract impasse

The New York Times, June 22, 2011

The Walgreen Company said on Tuesday that it was willing to walk away from more than $5 billion in annual revenue because the pharmacy benefits manager Express Scripts did not pay it enough to fill prescriptions. If the companies do not settle their dispute, people whose prescription benefits are handled by Express Scripts will not be able to get their prescriptions filled at the biggest drugstore chain in the United States, and Walgreens will give up about 7% of its annual revenue. The announcement on Tuesday follows a similar contract fight a year ago between Walgreens and the CVS Caremark Corporation that was resolved less than two weeks after it became public. The impasse with Express Scripts overshadowed news that Walgreens' net income climbed 30% in its third quarter. Walgreens' stock fell $1.90, or 4.2%, to $43.28 a share. Express Scripts rose 20 cents to $54.99 a share. Walgreens, which has spent months negotiating a new contract with Express Scripts, said it would stop participating in Express Scripts' prescription plans starting Jan. 1.