Walgreens May Not Need to Buy a Health Plan to Stay Competitive

The woods have been thick with mergers joining formerly disparate segments of the healthcare industry, with major drugstore chains and insurers being a prime example. The biggest headlines of that lot followed news of CVS’s plans to by Aetna. Nonetheless, one of CVS’s key competitors is sitting out this growing trend, at least for now. Instead, Walgreens Boots Alliance has chosen to stick closer to its core business by building a close relationship with Prime Therapeutics, a pharmacy benefit management company owned by 18 Blue Cross and Blue Shield companies. Actually, according to recently published article in Forbes, it was that relationship that likely pushed CVS to make the Aetna deal to begin with. The two approaches may not be as different as they appear; the Prime-Walgreens partnership reflects over 20 million health plan members, while bringing Aetna into the fold moved some 22 million potential patients closer to CVS’s front door. Both Walgreens and CVS say their respective partnerships will save the health system money and help patients be more adherent to their medication regimens (and therefore produce better outcomes). One differentiator that may give Walgreens and Prime an advantage: As 2018 progresses Walgreens will be integrating more than 1,900 stores it purchased from Rite Aid, along with three distribution centers and accompanying inventory. Even if it closes 600 locations as planned, Walgreens will still end up with more retail locations than CVS.