Kroger Health to End Express Scripts Pharmacy Provider Agreement
Kroger’s retail pharmacy arm is seeking an end to its agreement with Express Scripts, Inc. citing high costs and an inability to negotiate with the pharmacy provider.
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By - Last week, Kroger Health — the grocery store chain’s pharmacy business — surprised Express Scripts with written notice of intention to terminate their agreement for commercial customers.
In a statement, president of Kroger Health Colleen Lindholz explained the company’s decision: "We took the necessary step of announcing our intention to terminate our contract with Express Scripts because the current arrangement does not enable Kroger to improve health access, deliver greater pricing transparency, and keep prices affordable for our more than 17 million patients. So far, our efforts to negotiate in good faith have not delivered an agreement in the best interest of our customers — especially members of the military and their families receiving benefits through Tricare — that protects them from rising costs amid record inflation.”
Negotiations between Kroger and Express Scripts have been ongoing since February of 2022 without any progress. In a statement, Kroger characterized Express Scripts’ most recent proposal as being “far out of line with all other pharmacy providers and far outside the industry standard.”
Express Scripts’ parent company Cigna did not release a public statement on the matter.
The termination will affect about 10% of Kroger Health’s retail customers. Additionally, most of Express Scripts’ commercial customers will be unable to fill prescriptions at Kroger pharmacies if an agreement cannot be reached before December 31, 2022.
“Kroger remains willing to negotiate any contract with Express Scripts that results in a fair, transparent agreement at a rate that benefits everyone — particularly our customers — and prevents any disruption of services,” concluded Lindholz.
Kroger’s 17 million patients and 22,000 healthcare professionals provide for less than 5% of Express Scripts’ business. The loss will be felt more harshly at Kroger Health than at the massive Express Scripts parent company, Cigna.
Express Scripts’ power raises questions about its market dominance and the near monopoly it holds over some regions. Express Scripts, CVS Caremark, and OptumRx control around three-quarters of the pharmacy benefit manager (PBM) market in the United States. Since Cigna purchased the PBM in 2018, its revenue has soared, and prices have risen for consumers.
Around one year after Cigna bought Express Scripts, the company increased the cost of some generic drugs for military members by nearly 40%. In 2020, policymakers called out Cigna for the rise in out-of-pocket insulin prices. The company has since adjusted its insulin pricing to avoid political ire on a drug as in vogue as insulin.
