Walgreens Forms Alliance With Prime Therapeutics -- Update
August 29 2016 - 3:23PM
Dow Jones News
By Paul Ziobro and Tess Stynes
Walgreens Boots Alliance Inc. has struck a partnership with
Prime Therapeutics to help it capture a greater share of the
prescription-drug market and better compete with CVS Health
Inc.
On Monday, Walgreens announced it is partnering with Prime, a
St. Paul, Minn.-based pharmacy benefit manager owned by 14 leading
Blue Cross and Blue Shield health plans. The two companies will
combine their specialty and mail-service businesses, and Walgreens
will become the preferred pharmacy where Prime's members could pay
less to fill their prescriptions.
The deal is the second partnership that Walgreens made with a
pharmacy-benefits manager in recent months that could help it
process more prescriptions and give it more muscle to compete
against CVS Health's integrated model that combines a retail
pharmacy chain with a large PBM.
Since taking over the nation's largest drugstore chain, formed
through the 2014 merger with the European retailer and drug
wholesalers Alliance Boots, Walgreens Chief Executive Stefano
Pessina has been open to partnering with a variety of companies in
the tangled health care system to grow scale and lower costs.
Pharmacy-benefits managers, which include companies like Express
Scripts Holding Co. and CVS Health's Caremark, operate as middlemen
between insurance companies, corporations that pay for health
coverage, drugmakers, and pharmacies. They help process claims for
prescriptions drugs while also negotiating with drugmakers and
insurance companies over the price of medications.
Under terms of the partnership with Prime, Walgreens would
become the core participant in Prime's national preferred pharmacy
network starting next year. That would mean Walgreens will offer
lower prices to Prime members who are in preferred networks at its
more than 8,000 drugstores.
The partnership also includes data sharing between the sides
that can allow them to better control costs and manage the health
of patient.
The combined central specialty and mail services company, which
will be jointly owned by the two companies, would give Walgreens
more power to negotiate purchasing drugs and cut costs. That entity
will have its own board and executive team, jointly chosen by
Walgreens and Prime.
Financial terms of Walgreens Boots deal with Prime weren't
disclosed. It's expected to close in the first half of 2017.
In March, Walgreens formed a partnership with UnitedHealth Group
Inc.'s OptumRx, which manages prescription drug insurance for more
than 66 million Americans. That deal saves OptumRx members money
when they fill certain 90-day prescription at Walgreens or through
its mail order service. The deal also includes data sharing.
Walgreens also is in the midst of buying smaller drugstore chain
Rite Aid Corp. in a deal that also would give Walgreens control of
Rite Aid's small pharmacy benefits business, EnvisionRx. The $9.4
billion transaction is scheduled to closed this year, pending
federal antitrust review.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Tess Stynes at
tess.stynes@wsj.com
(END) Dow Jones Newswires
August 29, 2016 15:08 ET (19:08 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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