Express Scripts, Inc. v. Walgreen Co.

Filing 1

COMPLAINT (as redacted for confidentiality) filed by Express Scripts, Inc.; Filing fee $ 350, receipt number 0752-6354317. (Attachments: # 1 Exhibit 1 (redacted), # 2 Exhibit 2 (redacted), # 3 Exhibit 3 (redacted), # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8)(White, James)

EXHIBIT 2

AM/

EXPRESS SCRIPTS®
.9.11110r

Julia G. Brncic, Esq.
Assistant General Counsel
(314) G84-6379 (Direct Line)
[e-mail] (E-Mail)

July 27, 2011

VIA FEDERAL EXPRESS

WHS Legal (MU)
Walgreen, Co.
1411 Lake Cook Road, MS L319
Deerfield, IL 60015
Re: Cease and Desist/Marketing to Medicare Part D Members
To Whom It May Concern:
It has recently come to our attention that Walgreen, Co. ("Walgreens") is distributing marketing
materials in the form of the letter attached hereto (the "Marketing Letter") to members of
Medicare Part D Prescription Drug Programs administered by Express Scripts, Inc. (the "ESI Part
D Members") and ("ESI") respectively, which may be a violation of the Medicare Marketing
Guidelines ("Guidelines") Issued by the Centers for Medicare and Medicaid Services ("CMS") and
the terms of your Provider Agreement with ESI ("Provider Agreement").
We have been contacted by Medicare Part D plan sponsors for whom we provide pharmacy
benefit management services, expressing concern that the purpose and desired effect of the
Marketing Letter is to create member confusion and obtain a financial benefit for Walgreens by
steering ESI Part D Members from their existing Part D plans to Part D plans that will allow
Medicare Part D patients to use Walgreens pharmacies after December 31, 2011, the date
Walgreens intends to sever its contractual relationship with ESI. In addition, we have been
contacted by numerous ESI Part D Members who are confused by the Marketing Letter and
unnecessarily anxious about their ability to continue to obtain the drugs they have been
prescribed.
The Marketing Letter states in pertinent part:
For our Medicare Part D patients, you'll have an opportunity during the Annual
Enrollment Period beginning on Oct 1 to switch to a Medicare Part D plan that
includes Walgreens. This will allow you to continue using your Medicare Part D
coverage at Walgreens in 2012.
The Guidelines were specifically established by CMS to prevent the sort of member confusion
that the Marketing Letter has created, and to prevent activities that "steer or attempt to steer a
otential enrollee toward a lan o limited number of lens for which the individual or entity
performing marketing activities expects compensation directly or indirectly for such marketing
activities." emphasis' added (Guidelines, Section 10) The Guidelines state that plan sponsors are
responsible for materials distributed on their behalf, and that "the plan sponsors must ensure

One Express Way 0 St. Louis, MO 63121 9 314.996,0900

www.express-scripts.corn
V1W10

WHS Legal (MU)
Walgreen, Co.
July 27, 2011
Page - 2 that any providers contracted (and its subcontractors, including downstream providers or
agents) with the plan sponsor comply with the requirements outlined [in the Guidelines]."
(Guidelines, Section 70.12.2)
ESI for itself as a Part D plan sponsor, and as a subcontractor to our client plan sponsors, is
required to comply with the Guidelines. Similarly, Walgreens, as a subcontractor and
downstream provider to ESI's Part D plan and those of our clients, is also obligated to comply
with the Guidelines. Providing a marketing letter without prior approval from ESI (as a Part D
plan sponsor) and from the Part D plan sponsors with which ESI contracts, apparently violates
the Guidelines. Under the Guidelines, a communication that includes annual election period
information and network provider changes such as the one Walgreens distributed, must be
submitted and approved by CMS and Part D plan sponsors prior to use. It is also unlawful to
begin to market plan options for 2012 prior to October 1. Moreover, communications may not
be materially inaccurate or misleading or otherwise make material misrepresentations.
(Guidelines, Section 90.1) The Marketing Letter informs ESI Part D Members that they may
switch Part D plans during the Annual Election Period starting October 1. This is inaccurate as
the Annual Election Period begins on October 15.
In addition, the terms of our Provider Agreement support the Guidelines. Specifically,
REDACTED
Lastly, the Guidelines also directly prohibit a provider (which includes pharmacies and
pharmacists, see Guidelines Section 70,12) from steering Medicare Part D members to one Part
D plan or another and remind providers to remain neutral parties with respect to marketing or
enrollment decisions:
Plan sponsor must ensure that any providers contracted (including
subcontractors Or agents) with the plan sponsor to perform functions on their
behalf related to the administration of the plan benefit, including all activities
related to assisting in enrollment and education, agree to the same restrictions
and conditions that apply to the plan sponsor through its contract. In addition,
the plan sponsor (and subcontractors, including providers or agents) are
prohibited from steering, or attempting to steer an undecided potential enrollee
toward a particular provider, or limited number of providers, offered either by
the plan sponsor or another plan sponsor, based on the financial interest of the
provideror agent (or their subcontractors or agents); and
Providers may face conflicting incentives when acting as a plan sponsor
representative. For example, some providers may gain financially from a
beneficiary's selection of one plan over another plan, Additionally, providers
generally know their patients' health status. The potential for financial gain by
the provider Influencing a beneficiary's selection of a plan could result in
recommendations that do not address all of the concerns or needs of a potential
plan enrollee. (Emphasis added.) (Guidelines, Section 70.12,2)

178543,1

WHS Legal (MU)
Walgreen, Co.
July 27, 2011
Page - 3 Walgreens has publically stated that ESI's proposal would:
•

"cuf reimbursement rates below the industry average cost" (June 21, 2011 press

release);
•

"cut reimbursement rates to levels below the industry average" (letter to benefits
consultants);

•

"cut reimbursement to unacceptable levels below the industry average cost"
(letter to mutual Walgreens/Express Scripts customers; letter to employers who
are out to bid for PBM services);

•

"undervalue" Walgreens (handout to Walgreens' pharmacy patients in an ESI
prescription drug plan); and

•

make Walgreens feel like an "undervalued partner" (Q3 2011 earnings call).

We think these statements are indicative of the fact that Walgreens believes it will gain
financially should its Medicare Part D patients become members of any PBM other than EST and
that this is the motivation behind Wa!greens' attempts to influence Medicare Part D members.
ESI's plan sponsors are concerned that Walgreens' actions have jeopardized their
positions with CMS. In addition, ESI as a Part D plan sponsor, shares this concern
with respect to its own position with CMS.
Consistent with the foregoing, ESI hereby demands that you immediately cease and
desist from publication, distribution or circulation of the Marketing Letter or any
further marketing activities directed to ESI Part D Members, as well as from any
conduct that would constitute a breach of Walgreens' obligation as a participating
provider in ESI network(s) under the Provider Agreement Walgreens' efforts to
market directly to ESI Part D Members is not only conduct that constitutes a breach
of Walgreens' obligation as a participating provider under the Provider Agreement,
it may be a potential violation of the CMS Marketing Guidelines that Walgreens is
contractually bound to follow.
Please be reminded that ESI is prepared to pursue all available legal and equitable remedies to
enforce its rights under the Provider Agreement, including termination of participation in EST's
networks, or contacting CMS.

Attachment

178543,1

2011/07/05 15:30:19

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Non-Military Member Letter A
To patients in an Express Scripts prescription drug plan:
As a valued Wa!greens pharmacy patient, we want to let you know
that our pharmacies are not planning to participate In the Express
Scripts pharmacy provider network as of January 1, 2012, as
negotiations on a contract renewal have been unsuccessful. (Express
Scripts Is the "pharmacy benefit manager" that administers your
employer's, health plan's or Medicare Part D pharmacy benefits.)
However, we want to make sure you know Walgreens will continue
honoring all prescription plans administered by Express Scripts
- and filling the covered prescriptions - through the end of
2011.
We are moving forward without Express Scripts given Its position in
contract renewal negotiations that we believe undervalued our services
and convenience to patients — especially our trusted pharmacists and
clinicians who stand ready to deliver critical health care advice, and
the most convenient locations with more drIve-thru and 24-hour
pharmacies than any other national drugstore chain.
Regardless of our business disagreement with Express Scripts,
Walgreens will do everything we can to help you transition next year
to another pharmacy.

You can continue using your prescription
benefits
at Walgreens through Dec. 31, 2011.
For our Medicare Part D patients, you'll have an opportunity during the
Annual Enrollment Period beginning Oct. 1. to switch to a Medicare Part
D plan that includes Waigreens. This will allow you to continue using
your Medicare Part D coverage at Walgreens in 2012.

2011107/05 15:30:19

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If you are unsure about any of this Information or have any questions

about your prescription insurance coverage, please see the attached
Frequently Asked Questions or contact your employer's, health plan's
or Medicare plan's benefits department. We appreciate having you as a
customer and hope to continue to be your destination for your
pharmacy, health and wellness products and services.
Sincerely,
•

)
,

HRJ

Kermit Crawford
President - Pharmacy, Health and Wellness
Walgreens
Frequently Asked Questions Regarding Walgreens and Express
Scripts
Why has Wa!greens decided to not participate in Express
Scripts' network?

Under the contract renewal terns proposed by Express Scripts, it no
longer makes good business sense for Wa!greens and the strategic
direction of our company to continue our relationship with them.
Walgreens Is committed to providing quality, convenient and costeffective pharmacy services to our patients, but we cannot continue to
deliver these services under the terms and rates Express Scripts
offered. As the largest retail provider In their pharmacy network, we
were surprised by Express Scripts' ultimate stance during our talks,
which made it clear to us that they no longer had an interest in
continuing a meaningful relationship,
My prescription Insurance plan is managed by Express Scripts.
How does this affect me?
You can continue flIHng your prescriptions as usual at Walgreens
through the remainder of 2011. Since your plan is managed by
Express Scripts, you won't be able to use your current Insurance at

Wa!greens beginning in January 2012. We will do everything we can
to help you transition next year to another pharmacy. For example, we
may be able to print a complete record of your medications that are
filled with us.

2011/07/05 15:30:19

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My I ledicare Part D plan is managed by Express Scripts. How
am I affected?
You can continue filling your prescriptions as usual at Walgreens
through the remainder of 2011. Beginning on Oct. 1, you'll have an
opportunity during the Annual Enrollment Period to switch to a
Medicare Part 0 plan that Includes Walgreens In 2012. This will allow
you to continue using your Medicare Part D coverage at Walgreens
next year.
Who is Expr

Scripts?
Express Scripts manages prescription benefit plans for employers,
Medicare Part D plans and other groups.
Is it possible Walgreens could return to th ,.1 rxpress Scripts
network?

We don't know how our business relationship may change in the
future.
What else can I do?

If you have.any questions about your prescription insurance coverage,
such as other plans that may be available to you through your
employer, health plan or Medicare Part 0, please contact your
employer's, health plan's or Medicare Part D benefits administrator.