Walgreens to sell pharmacy-benefit unit

Walgreen Co. is selling its pharmacy benefit management business, as the Deerfield-based drugstore giant pushes to get consumers to the pharmacy counter and away from mail order.

The nation's largest drugstore chain said Wednesday that it will sell Walgreens Health Initiatives for $525 million in cash to Catalyst Health Solutions Inc., of Rockville, Md. The deal is expected to close in June.

Walgreens and other retailers are working hard to increase foot

traffic into their stores by adding medical services such as vaccinations and primary care from nurse practitioners. But owning a pharmacy benefit manager is contrary to that strategy.

"With nearly 7,700 drugstores as our center of gravity, we are focused more than ever on delivering convenient, affordable, high-quality pharmacy, health and wellness solutions, and on enhancing our full scope of services to become America's first choice for health and daily living needs," Walgreens Chief Executive Greg Wasson said.
Pharmacy benefit managers work as middlemen that buy prescription medicines from drugmakers and provide prescription coverage to employers, typically encouraging consumers to bypass retail pharmacies and purchase their drugs, usually in three-month supplies, through the mail.
Walgreens pushed its benefit managers unit in recent years to employers as companies and insurers increasingly encouraged employees to get more of their prescriptions by mail. Employers saw mail order as less expensive and popular with consumers because it saved money.
But consumers are finding better buys from retailers, while also seeing benefits of cheaper generic copies, leading analysts to question the savings of mail-order drugs. Employers and insurers typically offer health plan members generic drugs for chronic conditions such as high cholesterol and hypertension for free, and retailers, including Wal-Mart Stores Inc., have popularized 30-day generic prescriptions for just a few dollars.
"We don't think the savings with mail are that big," said Robert Zimmerman, Walgreens senior vice president and chief strategy officer. "We see the value of face to face."
In recent months, Walgreens has aggressively marketed an alternative to the convenience of mail order by allowing its customers to fill 90-day prescriptions at the pharmacy counter.
Walgreens said it will retain the mail-service portion of the pharmacy benefit business, which it described as "small," so that the company can provide its customers the option of mail order.