Walgreens said to consider sale of PBM

NEW YORK Walgreens is mulling the sale of its 15-year-old Walgreens Health Initiatives pharmacy benefit management division, Bloomberg news service reported Monday.

Walgreens is neither confirming nor denying the report. Company spokesman Robert Elfinger said the company “[would] not comment on rumors or speculation.”

WHI and its mail-order pharmacy component generate in excess of $1 billion in annual revenues and fill or process more than 100 million prescriptions, and Bloomberg cited sources who estimated a sale of the PBM could fetch $500 million to $1 billion, depending on what assets are included in the deal. Among the PBMs that have expressed interest in WHI, according to Bloomberg, are the industry’s top three players: CVS Caremark, Medco Health Solutions and Express Scripts.

In one sense, the sale of Walgreens Health Initiatives would simplify the company’s business model and eliminate a somewhat schizophrenic approach to the pharmacy market. The reason: Even as it has marketed its PBM and mail services, Walgreens also has competed hard against mail-order pharmacy, and taken a firm stand against other PBMs when they instituted policies mandating that their members use mail order exclusively for maintenance medication refills.

What’s more, WHI gradually has been eclipsed in the company’s hierarchy of priorities by a massive effort to develop and integrate all the company’s “points of care,” and take those services directly to employers, health plans and patients. Its health service arsenal now includes nearly 7,562 drug store pharmacies; its Take Care Health Systems subsidiary, which manages some 400 worksite health centers as part of the Walgreens Complete Care and Wellbeing health service network, along with some 350 Take Care in-store, convenient-care clinics; its fast-growing specialty pharmacy and home-infusion business; and its roughly 100 hospital and professional pharmacies.

In a 2009 interview with Drug Store News, Walgreens president and CEO Greg Wasson gave a hint about the diminishing strategic importance of WHI as the company shifted its focus to providing a wide menu of health services directly to employers and health insurance plans. “The neat thing about … our employer solutions model is that large employers and managed care organizations are interested in working with us because they see us as a provider of services they can work with, and pharmacy benefit managers look to us, too,” he said at the time. “We don’t have to be the PBM.”

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