Express Scripts, Walgreen settle pharmacy spat Thu Jul 19, 2012 9:44am EDT (Reuters) - Express Scripts Holding Co and Walgreen Co said Thursday that they had struck a pharmacy network agreement that settles a long-running dispute, sending shares of both companies sharply higher. Walgreen, the largest U.S. drugstore chain, will be part of the broadest network of drugstores available to clients of pharmacy benefit manager Express Scripts, as of September 15. While the agreement brings Walgreen and Express Scripts back together, it is not clear how many of Express Scripts' clients will sign up for the broad network that will include Walgreen. Also, it is unclear what Walgreen will do to entice patients who have filled prescriptions elsewhere since the beginning of 2012 to return to its 7,907 U.S. stores. Shares of Walgreen jumped 11 percent in premarket trading following the announcement, while Express Scripts shares rose 4 percent. Shares of CVS Caremark Corp, a rival drugstore chain and pharmacy benefit manager, fell 5 percent. Walgreen's sales have suffered since it stopped filling prescriptions for consumers with Express Scripts coverage at the end of 2011, due to a contract dispute between the two corporate behemoths. Express Scripts has gained even more scale due to its recent acquisition of rival Medco. Meanwhile, Walgreen has sought to expand outside of the United States into Europe, taking a stake in health and beauty group Alliance Boots Holding Ltd. JP Morgan analyst Lisa Gill noted that it is up to Express Scripts clients, such as employers, to decide whether to include Walgreens in their networks going forward. "We believe a number of plan sponsors have already signed narrow network agreements that exclude Walgreens, which will remain in place," Gill wrote in a research note. When Walgreen stopped filling prescriptions for Express Scripts patients, rival drugstores such as CVS gained some of that business. In May, CVS raised its full-year profit forecast due in part to its success in winning over former patrons of Walgreen and its chief executive said that the boost from his rivals' fallout could be long lasting. "The longer the impasse lasts, the stickier that customer is going to be," CVS CEO Larry Merlo said in May. They're going to have an opportunity to visit a CVS multiple times and begin to establish a relationship with the CVS pharmacists. Gill said she expects CVS to retain 75 percent to 80 percent of the prescriptions it gained due to the impasse. The chief executives of Express and Walgreen hailed the multi-year agreement in a joint statement. "I am pleased that Walgreen and Express Scripts have been able to reach an agreement that works for both parties," Walgreen CEO Greg Wasson said. The broadest Express Scripts network will now offer more than 64,000 pharmacies nationwide, including Walgreens. Reporting by Lewis Krauskopf in New York and Jessica Wohl in Chicago; Editing by Gerald E. McCormick, Bernadette Baum and Sofina Mirza-Reid