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Rx battle heats up between CVS, Walgreens

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CVS Health’s scaled-back 2017 guidance, given in its third-quarter report this week, spotlights an intensifying competitive battle with rival Walgreens Boots Alliance.

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Adam Fein

CVS reported that for fiscal 2017 it expects to lose over 40 million retail prescriptions due to marketplace changes, notably narrower retail pharmacy networks excluding CVS Pharmacy drug stores. The announcement sent CVS shares down by double digits on Tuesday.

Pharmacy supply chain expert Adam Fein, president of Pembroke Consulting, said in a posting Thursday on his Drug Channels blog that CVS Health “placed the blame squarely on Walgreens Boots Alliance.”  He cited WBA’s partnership with Prime Therapeutics and win over CVS to become the preferred pharmacy in the TRICARE network.

In March, Walgreens also unveiled a partnership with PBM OptumRx, part of UnitedHealth Group, to develop an integrated pharmacy care solution that blends attributes of in-store and mail-order prescription drug services.

“Call it competitive judo: Walgreens has used the strength of CVS Health’s integrated PBM/retail model against the CVS retail pharmacy business,” wrote Fein, who’s also CEO of Pembroke’s Drug Channels Institute.

Specifically, he explained, CVS’ successful Maintenance Choice program — which, embraced by plan sponsors, gives CVS Caremark PBM mail order patients the option to get their scripts at a CVS Pharmacy store — has created an opening for WBA to team up with other PBMs.

“CVS Health’s losses correspond to Walgreens’ aggressive partnering strategy. As I told The Wall Street Journal: “Walgreens is trying to be the best friend of every PBM that’s not named Caremark,’ ” Fein said in his blog.

Check out Fein’s analysis of how CVS’ loss of these prescriptions impacts its retail profits beyond the numbers alone.

“The pharmacy industry has entered a new period of hypercompetition,” he said in the blog post.


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