Deerfield, Ill. -- Walgreen Co. said Tuesday it will terminate a $5.3 billion-per-year relationship with Express Scripts.
Walgreen reported that contract negotiations with Express Scripts have failed, and it will stop participating in the St. Louis company's prescription plans starting Jan. 1. Express Scripts processes about 90 million prescriptions that will be filled at Walgreen stores in fiscal 2011, which will bring Walgreen about $5.3 billion in revenue.
Express Scripts pays Walgreen to fill each prescription. Walgreen said Express Scripts wanted to cut those payments so they were less than the cost of providing the prescriptions, and said those rates were "unacceptable." Walgreen also said Express Scripts wanted to define contract terms including definitions of name-brand and generic drugs, and transfer of prescription drug plans to different networks.
The announcement has overshadowed news that Walgreen's profit climbed 30% in its third fiscal quarter to $603 million, from $463 million in the year-ago period.
Revenue climbed to $18.37 billion from $17.2 billion. Analysts expected $18.38 billion.