Walgreens chief financial officer and its pharmacy chief lost their jobs to a billion dollar projection error in its Medicare-related business.
As Walgreens sought to play a greater intermediary role in the dispensing of prescription drugs under Medicare Part D, the pharmacy unit got tangled in a mismatch between prices in annual contracts negotiated with Medicare and price increases on generics imposed by pharmaceutical companies, according to an article in the Wall Street Journal.
Wade Miquelon, Walgreens former CFO, abruptly cut Walgreen’s 2016 pharmacy unit announcement from $8.4 billion to $7.3 billion on July 7. Between 25 and 30 percent of Walgreen’s prescriptions are derived from Medicare Part D plans, the WSJ reports.
Based on interviews with Walgreens investors, the Wall Street Journal reports that company directors said forecasts provided in April were ‘inadequate’ and that the company's finance and pharmacy units weren't “talking to each other.”
Miquelon responded that finance is embedded in the various business units, but embedded or not, Walgreens officials told the Journal the obvious: The people writing the contracts were not in communication with finance.
Timothy McLevish, a former Kraft executive, replaced Miquelon, who will receive a $3.2 million severance and a bonus of $1.2 million.