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UPDATE: Walgreen, Express Scripts Agree To Dismiss Lawsuit


--Express Scripts, Walgreen agree to dismiss lawsuit over Walgreen marketing tactics

--Suit was filed last year amid contract-renewal dispute

--Walgreen says dismissals have no impact on whether companies can come to terms on pharmacy agreement


(Updates with background, details on lawsuit.)

   By Jon Kamp 

Walgreen Co. (WAG) and Express Scripts Holding Co. (ESRX) have agreed to dismiss a lawsuit Express Scripts filed last year over Walgreen's marketing tactics when the relationship between the drugstore chain and pharmacy-benefit manager was breaking down.

The two companies remain at odds after they were ultimately unable to reach a new deal over reimbursement rates for dispensing prescriptions. Walgreen, which left Express Scripts' pharmacy-benefit network on Jan. 1, indicated resolving the lawsuit doesn't have a bearing on potentially fixing their relationship.

"These dismissals have no impact on the parties' ability or inability to come to terms on a pharmacy agreement," Walgreen said in a brief statement.

Instead, Friday's dismissal indicates the lawsuit Express Scripts filed last September is now less relevant. The company has argued in federal court that Walgreen crossed a line and was making disparaging remarks in its attempt to win over clients as the contract dispute brewed. Walgreens had defended its actions.

Pharmacy-benefit managers, or PBMs, handle drug benefits for health plans and corporate customers while using their buying power to seek drug manufacturer rebates. St. Louis-based Express Scripts recently became the industry's largest PBM by buying rival Medco Health Solutions.

Deerfield, Ill.-based Walgreen, the nation's largest drugstore operator, has suffered customer losses since the relationship with Express Scripts ended because people covered by the PBM had to find other pharmacies to get the best prescription prices. Express Scripts has cited a smooth transition and little customer disruption on its end, although analysts are watching closely to see if forgoing Walgreen access could ultimately hurt business.

Walgreen declined comment beyond its brief statement noting the end of the lawsuit, and an Express Scripts spokesman declined comment on the matter. A short filing in the U.S. District Court for the Northern District of Illinois noted that both companies were dismissing the case.

Shares of Walgreen rose 1.2% to $30.30 in after-hours trading Friday after sinking 1.9% during a broad market sell-off in regular trading hours. Express Scripts shares were unchanged after-hours following a 2.9% slide during regular trading.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728;

(Nathalie Tadena contributed to this article.)


(END) Dow Jones Newswires

June 01, 2012 18:21 ET (22:21 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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