The CtW Investment Group is releasing a letter to Walgreens (NYSE: WAG) Chairman Alan McNally today calling for an independent review of the Express Scripts dispute. The Investment Group believes this review is necessary to determine if remaining outside of the ESRX pharmacy network is in the best interest of shareholders. The group is also asking Walgreens to establish clear performance benchmarks for the second half of the calendar year.
Excerpts of the letter to Walgreens Chairman Alan McNally from CtW Investment Group Executive Director William Patterson are below:
"Walgreens shareholders have seen our company lose one third of its market value, more than $14 billion, since the company announced it would exit the pharmacy network of Express Scripts (ESRX), the largest pharmacy benefit manager in the country, about a year ago. Shareholders bear the costs of this disastrous decision, as the percentage of scripts lost due to the dispute continues to rise, belying management's optimistic statements about recapturing ESRX business. Given ongoing damage to our company we believe the time has come for the Board to establish a special committee comprised of independent directors to review the Express Scripts dispute and set clear benchmarks for performance in the second half of the calendar year.
"Walgreens has a track record of aggressive bargaining with PBMs and state governments, which served the company well in the past. But with this latest maneuver, management made a gross miscalculation that has decimated shareholder value and placed the company at loggerheads with industry trends towards limited pharmacy networks.
"The market's faith in Walgreens management has been seriously shaken and we believe that the time is now for the Board to demonstrate responsible leadership and right the course of the company. If Walgreens insists on maintaining its lone stand against Express Scripts there must be clear measures of performance reported to shareholders that demonstrate whether the company can successfully grow its pharmacy business without the nation's largest PBM."
The CtW Investment Group works with pension and benefit funds sponsored by unions affiliated with Change to Win, which collectively hold over $200 billion in assets.
CtW Investment Group
Matthew Painter, 212-341-7071