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Walgreen Sees Flexibility To Keep Medco Clients If Merger Wins Approval

--Walgreen says Medco clients have greater control to keep pharmacy in their network than Express Scripts' customers --Express Scripts declines to speculate on how a potential merger with Medco could affect existing contracts --Walgreen says it hopes to maintain relationship with Medco if a merger were to occur By John Kell Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Walgreen Co. (WAG) says it sees some flexibility in retaining access to Medco Health Solutions Inc.'s (MHS) clients even if the pharmacy-benefits manager is acquired. Walgreen's management told analysts during an earnings conference call that while it hopes to maintain a relationship with Medco if a merger with Express Scripts were to occur, discussions with health plans and employers led the drugstore chain to believe Medco's clients have greater control to keep Walgreen in their network than Express Scripts' customers did. A contract between Walgreen and Express Scripts expired at the end of last year over a dispute involving reimbursement rates. Though Walgreen doesn't have full visibility into the specific clauses and contracts Medco has with its clients, Chief Financial Officer Wade Miquelon said Medco clients have the added benefit of watching the Express Scripts contract dispute unfold and can look ahead to when their contracts end. Walgreen declined to provide any specific details about its terms with Medco, though Miquelon called the company's ongoing contract with Medco "fair for both parties." He added Walgreen intends to serve all patients unless the new company took "an extraordinary action, effectively terminating the existing contract or materially changing the terms or financial agreements." Express Scripts spokesman Brian Henry said his company wouldn't speculate on how a potential merger with Medco could affect existing contracts. Medco declined to comment on the specifics of its contract, adding until the merger was completed, it continues to operate in competition with Express Scripts. Walgreen on Tuesday said the impact of no longer being in Express Scripts network hurt fiscal second-quarter results by 7 cents a share, and it warned the loss of that business will result in a roughly 21-cent hit to fiscal-year earnings. Analysts and investors have fretted about the bottom-line impact if more clients were to be lost in the event Express Scripts wins regulatory approval to acquire Medco. Last year, Walgreen filled about 125 million prescriptions for Medco members and this year, as a result of Medco's client changes, the drugstore is on pace to fill about 108 million prescriptions. Taking into account some known client changes to other PBMs, including UnitedHealth Group Inc. (UNH), Walgreen estimates that the book of business with Medco will total about 74 million prescriptions at the start of next year. Miquelon warned actual 2013 business with Medco could face further adjustments following the PBM selling season. Walgreen's shares were up 0.9% at $34.69 in recent trading, while Express Scripts and Medco each inched lower. -By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com --Jon Kamp contributed to this article.

Stock News for Medco (MHS)
DateTimeHeadline
04/02/201219:28:09CORRECT: US Stocks End At Multiyear Highs On US Manufacturing...
04/02/201212:18:34CORRECT: Medco Executives Paid Max 2011 Bonuses; Express Scripts...
04/02/201212:04:59Medco Executives Paid Max 2011 Bonuses; Express Scripts More...
04/02/201210:39:10WSJ BLOG/Health: A.M. Vitals: Some States Move Forward Voluntarily...
04/02/201209:11:32Express Scripts Closes $29.1 Billion Medco Acquisition
03/30/201218:20:08US Pharmacy Groups Seek Temporary Restraining Order Vs Deal
03/29/201213:40:34Pharmacy Groups File Suit Against Express Scripts, Medco Deal
03/28/201209:47:51Express Scripts, Medco Say Deal Could Close Next Week
03/27/201214:56:14Walgreen Sees Flexibility To Keep Medco Clients If Merger Wins...
03/23/201220:04:33Medco To Pay $2.8 Million To Resolve CalPERS Payment Probe
03/19/201211:11:36Express Scripts/Medco Deal Could Face State Lawsuits -Bloomberg
03/12/201218:15:43Express Scripts, Medco Continue To Work With FTC On Deal
02/28/201211:29:17CVS Says Tailwinds Favor PBM-Retail Hybrid Business Model
02/23/201210:28:13Express Scripts Cites Smooth Transition From Walgreen
02/21/201207:22:31Medco Health 4Q Net Rises 12% As Revenue Easily Tops Estimates
02/08/201213:17:21Insurer Coventry Health Care Extends Pact With Medco By 3 Years
02/06/201214:31:04Big Grocery Chains Ask FTC To Block Medco-Express Scripts Deal...
02/06/201212:35:37February's Flurry Of Issuance Continues For High-Grade Corporates
01/27/201218:16:16Benefit Manager's Lipitor Move Highlights Pressure On Pfizer
01/12/201211:51:48FTC: CVS Caremark Settles Deceptive Pricing Charges, Will Pay...

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