Walgreens announced this week that it is expanding its specialty pharmacy offerings to include cell and gene therapy services. The move could allow Walgreens to play a larger role in a growing market — research shows that specialty drugs now account for more than half of prescription drug spending in the country, despite accounting for only a small percentage of total prescriptions.
With the announcement, the pharmacy giant unveiled a newly integrated business unit called Walgreens Specialty Pharmacy. The unit includes most of Walgreens’ specialty pharmacy assets, including specialty pharmacy subsidiary AllianceRx.
This unit will be part of Walgreens’ core retail pharmacy division. On the other hand, Shield Health Solutions – Walgreens’ subsidiary that supports healthcare pharmacies – remains under Walgreens’ US healthcare division.
As a newly renamed business unit, Walgreens Specialty Pharmacy will include an 18,000-square-foot innovation center in Pittsburgh, nearly 300 local specialty pharmacies, four central specialty pharmacies and more than 1,500 pharmacists with specialty training. The unit also has a growing list of 240 limited-distribution drugs, according to Walgreens’ press release.
Industry experts weren’t shocked by Walgreens’ announcement, saying it makes sense for a major pharmacy company to want to expand its presence in the fastest-growing segment of drug spending.
Joy Liu – CEO of Plenful, a company that provides automation tools for pharmacies – noted that healthcare is evolving and Walgreens, like any other healthcare company, needs innovative strategies to remain competitive.
“Specialty pharmacy services are lucrative and in high demand given medical advances and an aging population,” she wrote in an email. “This is an exciting step for both Walgreens itself and the patients they serve.”
By expanding its specialty pharmacy services, Walgreens can diversify its offerings. This could lead to the company improving its value proposition and relationships with patients, payers, providers and pharmacy benefit managers, Liu explained.
In their view, success will depend on how well Walgreens can “align its goals across all business units and leverage the best tools to streamline its operations and achieve growth.”
Another industry leader — Rick Ratliff, CEO of MedAdvisor Solutions, which provides patient engagement solutions for pharmacies — said he wasn’t surprised by Walgreens’ announcement given the company’s massive size and the impressive number of people it engages every day .
“Walgreens is very well positioned to provide patients with faster access to specialty medications, which will have a significant positive impact on health outcomes,” he said.
Many people who are prescribed specialty medications have to go through a complicated process to even get their medication, Ratliff noted. This process often requires prior approval, review of scope of benefits, and determination of financial assistance options.
This means specialty pharmacy services are not always accessible to the patients who need them, Ratliff explained.
“If people have the ability to go through these processes [a brand] When they have knowledge and trust, such as Walgreens, the value proposition for these individuals increases significantly – in addition to the fact that they will begin therapy more quickly and be successful in their medication journey,” he said.
Like Ratliff and Liu, Deborah Weinswig, CEO of Coresight Research, believes Walgreens’ decision to move deeper into the specialty pharmacy market could bring several strategic benefits.
Entering this market offers significant revenue opportunities due to the higher profit margins on specialty drugs compared to traditional drugs, she emphasized.
“Given the recent challenges some have faced with mergers and acquisitions, incorporation or acquisition may be the best direction at this time,” Weinswig wrote in an email. “When we look at trends in healthcare, there is a clear trend towards providing more integrated healthcare solutions.”
She noted that this expansion will enable Walgreens to better compete with key industry players that have already established specialty pharmacy services such as CVS and Cigna’s Express Scripts.
Walgreens’ move could also help the company diversify its customer base, Weinswig added. By providing specialty pharmacy services, Walgreens could be able to both retain existing customers and attract new customers who need these complex treatments, she explained.
And Weinswig believes Walgreens’ expansion in the specialty pharmacy segment will likely influence some broader trends in the industry.
They believe Walgreens’ entry into the specialty pharmacy market could increase competition, resulting in more competitive pricing and improved service quality. Greater competition could put pressure on smaller specialty pharmacies, potentially leading to consolidation in this market niche, Weinswig emphasized.
She also predicted that a more competitive specialty pharmacy market could spur innovation in medication management and patient care programs – improving patient outcomes and increasing the efficiency of the overall healthcare ecosystem.
“Walgreens’ move to build a specialty pharmacy business is a strategic initiative designed not only to capitalize on a lucrative segment but also to position the company for improved competitiveness and customer loyalty in the evolving healthcare landscape,” Weinswig wrote . “This development is expected to have a profound impact on the industry, boosting competitive dynamics, encouraging innovation and potentially accelerating market consolidation.”
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