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Ahead of the Bell: Express Scripts ends litigation

The Associated Press

The end of a legal dispute between Express Scripts and Walgreen removes a hurdle standing between the companies and a new contract to do business, according to BMO Capital.

The companies said Friday that they were halting the litigation that started last September when the pharmacy benefits manager sued Walgreen in federal court, accusing it of trying to lure away its customers as the companies neared the end of their last contract.

Walgreen, the nation's largest drugstore chain, used to fill prescriptions for Express Scripts, the biggest pharmacy benefits manager. But the companies let a contract between them expire at the end of last year after they squabbled publicly for months over terms of a new deal.

Pharmacy benefits managers run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.

Walgreen Co. has reported slumping sales for several months largely due to the end of the Express Scripts deal. But it has said it would rather give up the revenue than continue filling unprofitable prescriptions. Express Scripts has said it ended the contract with Walgreen because the drugstore chain wanted a premium compared to what Express Scripts paid other pharmacies.

Walgreen said in a statement released Friday afternoon that the agreement to end litigation has no impact on the ability of the companies to reach a new business agreement.

Express Scripts' impasse with Walgreen "feels like a strategic setback," BMO Capital analyst Dave Shove said in a research note. He said Express Scripts Holding Co. will face a competitive disadvantage if the issue is left unresolved for 2013.

Walgreen shares climbed 59 cents to $30.52 Monday in premarket trading.