Walgreens (WBA) is standing up a new specialty pharmacy segment to compete in an increasingly crowded pharmacy benefits manager (PBM) and specialty pharmacy space.
The company announced Thursday its new business unit and brand name: Walgreens Specialty Pharmacy.
The business “rolls up all Walgreens specialty pharmacy segment assets, including AllianceRx,” the company said in a statement.
AllianceRx is the combined entity that Walgreens and its then-partner and PBM Prime Therapeutics formed in 2017 that will merge into the new business unit in August.
“With approximately $24 billion in annual enterprise specialty revenue, Walgreens Specialty Pharmacy is the largest independent provider that offers the industry’s most robust specialty capabilities not vertically aligned with a pharmacy benefit manager,” said Rick Gates, chief pharmacy officer, in a statement.
In an interview with Yahoo Finance, vice president of pharmacy and specialty trade Pat Lupo said the target market is payers of health benefits — including insurance companies and large self-pay companies that are interested in diversifying their offerings.
The cost-cutting trend started in 2023 when Blue Shield of California split its pharmacy benefits between five entities, including newcomers Amazon Pharmacy (AMZN) and Mark Cuban’s Cost Plus Drugs — but maintained CVS Caremark (CVS) for specialty pharmacy.
“What we are doing with our combination of assets … is creating something new from a pharmacy delivery platform perspective and integrated model, where we actually occupy a very strong middle ground between the big three integrated specialty pharmacy and the niche, very small bespoke specialty pharmacy,” Lupo said.
He added that the combined revenue of the segment gives the company a chance to compete with the big three and place fourth. The big three include CVS, UnitedHealth’s OptumRx (UNH), and Cigna’s (CI) Evernorth Health Services, which includes Express Scripts.
The company anticipates not only working with private payers but also providing services to government programs like Medicare and Medicaid. In addition to managing the benefits, Walgreens said it would be able to help patients through 300 specialty pharmacies across the country, as well as four central specialty pharmacies.
Meanwhile, the company is looking at ways to expand specialty drug needs into the future, with an eye on gene and cell services. Walgreens announced a new 18,000-square-foot center in Pittsburgh that would provide services for these newer therapies, including playing a role in “the supply chain, logistics and financing,” according to the statement.
The announcement Thursday comes amid investor doubts as new CEO Tim Wentworth shifts gears away from vertical integration — to include a focus on providing clinical care services — and refocuses the company in ways that target various aspects of drug and drug delivery.
That includes maintaining a clinical trial program, which competitor CVS backed out of last year, and giving retail store managers more control over how to engage with their local communities and drive business growth decisions.