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Kroger Health to Terminate Express Scripts Agreement

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The retailer indicated that Express Scripts’ drug pricing model is unstainable for Kroger and its customers.

Kroger Health, the healthcare division of The Kroger Co., notified Express Scripts of its intention to terminate their pharmacy provider agreement for commercial customers.

“Since February, Kroger has attempted on dozens of occasions to negotiate in good faith with ESI (Express Scripts Inc.) — seeking a more equitable and fair contract that lowers cost, increases access, and delivers greater transparency — but there has been little to no progress to date,” Kroger Health said in a statement.

Kroger Health, which operates 2,200 pharmacies and 220 clinics in 35 states, said that Express Scripts’ current proposal is “far out of line with comparable terms Kroger has with all other pharmacy providers, and far outside the industry standard.”

“Any new agreement would need to increase access, deliver greater pricing transparency, keep prices affordable for our more than 17 million patients, and ensure Kroger is fairly compensated for the work done by our 22,000 healthcare professionals—from pharmacists and nurse practitioners to dietitians and technicians,” the retailer said.

Colleen Lindholz

Colleen Lindholz

“Kroger is doing everything possible to deliver greater value for our customers and navigate this ongoing period of record inflation. We do not believe Kroger customers should have to pay higher costs to increase Express Scripts’ profits,” Colleen Lindholz, president of Kroger Health, said in a press release.

So far, Kroger Health’s “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,” Lindholz added.

However, 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,” Lindholz said.

More than 90% of its customers will be unaffected by the termination of the agreement, Kroger Health said. However, if a new agreement is not reached by December 31, most Express Scripts' commercial customers around the country will no longer be able to fill prescriptions at pharmacies within the Kroger Family of Companies.

An Express Scripts spokesperson said that less than 1.5% of its customers currently fill their prescriptions at Kroger.

“At a time when we should all be working to reduce healthcare costs in the face of rising inflation, it is troubling that Kroger is pressing for a contract that would pass higher costs on to our clients and patients," the Express Scripts spokesperson said. "We remain focused on ensuring that the millions of patients we serve have affordable access to prescription drugs through our extensive network of more than 65,000 pharmacies, and would welcome Kroger back to the network if they decide they want to do what is in the best interest of their customers.”

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