The big news: Prescription activity spiked in Walgreens drugstores. It looks like Stefano Pessina, our global channels overlord and executive vice chairman and chief executive officer of WBA, has a solid strategy for winning U.S. prescription market share.
Back in November, I told The Wall Street Journal: “Walgreens is trying to be the best friend of every PBM that’s not named Caremark.” These latest results show that this aggressive partnering is paying off for its pharmacy business—although its front-end growth was weak and per-prescription profits appear to be down.
Read on for more details—and expect a competitive reaction.
As always, I encourage you to read the original source material for yourself. Here are direct links to the information about Walgreens Boots Alliance’s second fiscal quarter of 2017:
The chart below shows year-over-year change in same-store prescription count at CVS Health’s retail pharmacies, Rite Aid, and Walgreen Boots Alliance’s U.S. retail pharmacy business. These data reflect year-over-year changes in drugstores that have been open for at least 12 consecutive months. The figures express the number of prescriptions dispensed, which means that the numbers are unaffected by price changes from brand-to-generic substitution. This chart updates the data in Exhibit 34 of our 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.
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For 2016, CVS and Walgreens had comparable same-store prescription growth rates, averaging about 4%. Results at CVS, however, trended downward during 2016. Rite Aid’s prescription growth lagged that of the other companies and was negative for much of 2016.
But for the three months ending February 28, 2017, same-store prescriptions at Walgreens grew by 7.9%. I'll be surprised if CVS or Rite Aid match that figure for early 2017.
On the earnings call, WBA EVP and global CFO George Fairweather stated that the uptick in prescription activity "was primarily due to strong volume growth from Medicare Part D and strategic pharmacy partnerships which we announced last year."
He was referring to WBA's many deals with PBMs for commercial and Medicare Part D business. Here are some Drug Channels analyses to get you caught up on the most significant deals:
- Why the Walgreens/Prime Deal Could Transform the PBM Industry
(This one is worth rereading now that the deal has officially closed and Prime Therapeutics has displaced CVS Health for specialty pharmacy benefit management in the Federal Employee Program.)
Last fall, CVS Health began rethinking its partnering strategy. (See CVS Changes Direction With Surprise OptumRx Deal.) Expect the latest WBA results to trigger a countermove, especially if CVS reports disappointing prescription growth in a few weeks.
In the meantime, you can figure out which Adventure Time character you are.