The recent reaction against Walgreens’ decision to restrict distribution of the abortion pill is raising questions about whether the controversy could affect its growth strategies, including its ambitions to become a supplier. primary care services.
Walgreens said last week it would not sell mifepristone in 20 conservative-led states, after the attorney general threatened legal action if the pharmacy sold the abortion pill by mail. The company said it was participating in a certification process that would allow it to distribute the drug “in any jurisdiction authorized by law to do so.”
However, Walgreens’ situation is a bit complicated due to its strategic push into value-based primary care through VillageMD, in which it accounts for the majority of profits after pouring an additional $5.2 billion in 2021. By the end of 2022, Walgreens had opened more than 150 clinics operating under the Village Medical name and in the same locations as its stores to encourage physician-pharmacist collaboration. The plan is to reach 1,000 Village Health sites by 2027. VillageMD has a footprint in several states, including Texas and Florida, where attorneys generally threaten legal action.
While it’s not clear how the controversy will affect Walgreens in the long run, it is clear that the rapidly changing healthcare landscape features complex operational strategies that were once considered black and white.
“If you think back to six or eight years ago, when pharmacies were pharmacies and hospitals were hospitals and insurance companies were insurance companies,” said David Dobrzykowski, associate professor and director of the Walton College Healthcare Initiative. dangerous, you don’t have these spillover effects.” at the University of Arkansas. “It makes the decisions you can make in a business unit more complex, more sensitive and [with] the impact could potentially spill over into other businesses.”
It’s also possible that consumers on the anti-abortion side of the debate could react positively to Walgreens’ decision, he added.
VillageMD, where Walgreens CEO Rosalind “Roz” Brewer has a seat on the board, continues to buy specialist and primary care physician groups in multiple geographies and other properties. In November, VillageMD announced it would acquire Summit Health-CityMD for $8.9 billion to expand into more general care. Earlier this month, it announced the acquisition of Rocky Hill, Connecticut-based Starling Physicians, another multi-specialty and primary care group.
Walgreens has also invested billions of dollars in deals with home health company CareCentrix and specialty pharmaceutical organization Shields Health Solutions.
Last week’s decision to limit mifepristone allocations sparked a number of pro-choice leaders, including California Governor Gavin Newsom (D), who said Wednesday the state would not renew the contract. A $54 million Walgreens specialty pharmacy partnership provides prescriptions for the state’s prison system.
A Walgreens spokesperson said the company is “deeply disappointed” by California’s decision not to renew its long-term contract, which expires April 30.
“Walgreens is facing the same situation as all retail pharmacies, and no other retail pharmacy has said they would approach this situation differently, so it is not clear,” the spokesperson said. Where will this coin be transferred? “Our position has always been that, once we are FDA-approved, Walgreens plans to distribute mifepristone in any jurisdiction authorized by law to do so, including the state of California.”
A spokesman for Newsom said California is reviewing all agreements with Walgreens, following the governor’s social media post Monday saying the state will no longer do business with Walgreens.
Other major retail pharmacies, such as CVS or Kroger, have remained silent on the matter.
Some analysts think California could remove Walgreens from the pharmacy network in the state’s employee health plan, though the timeline will depend on the current contract. As of January, California had more than 230,000 active employees, including positions in government, universities and the Judiciary Council, according to the state’s comptroller’s office.
Covered California, one of the state’s public plans serving about 2 million people, said Tuesday that it is “working to determine the potential effects” of Newsom’s post, passing statements Ask another for the governor’s office. Medi-Cal, another major public program with more than 15 million certified eligible members, declined to comment.
John Ransom, executive director of healthcare equity research at Raymond James & Associates, sees Newsom’s comments as a political game, comparing it to Chick-fil’s previous backlash- A, Hobby Lobby Stores and, more recently, the loss of Walt Disney Co. Even a small amount of market share can be significant in the context of high competition among retail pharmacies, he said.
But some industry watchers don’t believe the current setback will have a lasting impact on the company, which posted $132.7 billion in revenue in fiscal 2022, which ended August 31. .
“It’s hard to say it hasn’t had an impact, but at the same time, how important could it really be? It’s hard to say,” said Brian Tanquilut, an analyst at investment banking firm Jefferies. “. “There was a PR component to him making that announcement, it brought the topic to attention.”
Retail pharmacies were forced to reassess policies around abortion pills after the US Food and Drug Administration finalized a rule change in January allowing more pharmacies, including chains Large and mail-order companies, distribute mifepristone if they go through the certification process. Following the announcement, Walgreens and CVS said they would review the change and comply with state and federal laws.
