Walgreens is fundamentally changing the way it does business with both its upstream pharmaceutical suppliers and its downstream customers in the managed care world. The goal: to help its partners on both ends knock down decision-making silos and create more strategic and profitable relationships that lead to lower costs, higher profits and most importantly, healthier patients.
“You can focus on the drug spend — which is 8% to 10% of the total healthcare spend in the United States — all you want. But the real Holy Grail is working with all of these partners on lowering overall medical costs and creating a better health outcome by leveraging all our assets in a completely different way,” said Jeff Berkowitz, SVP pharmaceutical development and market access.
Berkowitz leads the overall pharmacy contracting strategy for the company, both on the purchasing side with branded and generic pharmaceutical manufacturers, and on the retail payer side.
That puts Berkowitz in charge of both the drug procurement teams — which together purchase products that generate nearly $40 billion a year in pharmaceutical sales — and the sales, contracts and pricing, and marketing people who market Walgreens’ portfolio of pharmacy and health services to health plans, pharmacy benefit managers, hospitals, employers and other health stakeholders. It’s a more coordinated, even transformational approach to what he calls “the managed markets world” of health care.
Berkowitz came well-suited to the role. A lawyer and pharmaceutical industry veteran, he was SVP global access for Merck before joining Walgreens in September 2010 where he served on the global health and emerging markets leadership teams.
“The reason Walgreens wanted somebody with large Pharma experience,” Berkowitz explained, “is that we interacted with a big group of stakeholders and needed to find new ways to collaborate to remain relevant in an ever evolving industry.”
That included physicians, employers and other health plan payers, managed care organizations, and the branded and generic pharmaceutical companies from which Walgreens purchases tens of billions of dollars worth of medicines each year. “We really needed to better establish relationships [based on] our value proposition as a retail pharmacy and healthcare provider … to explore ways we could work together with pharma companies, even from a savings perspective, he said. So it’s much more now than just a tactical purchasing relationship.”
Walgreens completely transformed the relationship it has with pharmaceutical companies, Berkowitz added, by focusing on the value it could bring to those suppliers and “how they could leverage our footprint for … everything from compliance, adherence and educational programs around specific products … to the provision of clinical trials.”
“Walgreens has become an integral part of a pharmaceutical company’s strategy across their portfolio. It’s not about any one particular product, but a collective focus on the patient,” he said.
Under Berkowitz, Walgreens also has transformed the way it markets and explains the business to insurers, pharmacy benefit managers and health plan payers. Prior to that change, Berkowitz explained, the sales organization was focused on signing up small employers, for instance, to provide flu shots for their employees. “Today, we now have account managers creating partnerships with some of the largest insurers in the country who provide health benefits to tens of millions of people in the United States.”
Walgreens is well on its way to creating “fully integrated strategies” with the top decision-makers at health plan giants, employers and hospital systems, Berkowitz explained.
“It’s about how we solidify our role within the healthcare ecosystem,” he noted. “It’s critical for us to have deep relationships with the leading healthcare providers in the country.”