Walgreens Debuts Specialized Pharmacy Wing for Competitive PBM Scene

Walgreens has announced the establishment of a dedicated specialty pharmacy division, positioning itself in the competitive arena of pharmacy benefits managers (PBMs) and specialized pharmacy services.

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The company revealed its latest strategic move on Thursday with the introduction of Walgreens Specialty Pharmacy.

This new initiative consolidates all assets within the Walgreens specialty pharmacy segment, including AllianceRx, as stated in the company's official announcement.

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AllianceRx, a collaborative effort between Walgreens and former partner PBM Prime Therapeutics formed in 2017, is set to merge into the newly formed business unit by August.

Rick Gates, Chief Pharmacy Officer, emphasized the significance of this move, stating, "With approximately $24 billion in annual enterprise specialty revenue, Walgreens Specialty Pharmacy emerges as the leading independent provider offering unparalleled specialty capabilities unaffiliated with a specific pharmacy benefit manager." In an interview with Yahoo Finance, Pat Lupo, Vice President of Pharmacy and Specialty Trade, outlined the target market, emphasizing a focus on health benefit payers, including insurance companies and large self-pay entities keen on broadening their service portfolios.

The strategic shift towards cost optimization commenced in 2023, spurred by Blue Shield of California's decision to diversify its pharmacy benefits among five entities, welcoming newcomers such as Amazon Pharmacy and Mark Cuban's Cost Plus Drugs while retaining CVS Caremark for specialty pharmacy services.

Lupo elaborated on Walgreens' unique positioning within the evolving landscape, citing a blend of robust pharmacy delivery capabilities and an integrated model that bridges the gap between major integrated specialty pharmacies and smaller bespoke counterparts.

With a combined revenue bolstering its competitive edge, the company eyes a strong fourth position in the market, poised to contend with industry giants such as CVS, UnitedHealth's OptumRx, and Cigna's Evernorth Health Services.

Looking beyond traditional PBM roles, Walgreens anticipates extending its services to government programs like Medicare and Medicaid. Leveraging its extensive network comprising 300 specialty pharmacies nationwide and four central specialty hubs, the company aims to provide comprehensive support to patients.

In a forward-looking move, Walgreens sets its sights on expanding into emerging specialties, particularly in gene and cell therapies. The unveiling of an 18,000-square-foot facility in Pittsburgh underscores the commitment to these novel treatments, with a focus on facilitating supply chain logistics and financing.

Against a backdrop of investor skepticism, newly appointed CEO Tim Wentworth steers the company towards a strategic pivot, prioritizing clinical care services and redefining its approach to drug delivery. Initiatives include maintaining a clinical trial program and empowering retail store managers to drive community engagement and business growth decisions.

Walgreens' foray into the specialty pharmacy landscape marks a strategic evolution aimed at capitalizing on emerging trends and solidifying its position as a key player in the dynamic healthcare ecosystem.

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