Inside This Issue - Opinion
Deck being reshuffled in health care sector
May 6th, 2013
Much of the talk at the recent NACDS Annual Meeting centered on the investment by Walgreens and Alliance Boots in AmerisoureBergen, which, prior to the deal, was the nation’s No. 3 pharmaceutical distributor.
Coming on the heels of the strategic partnership formed by Walgreens and Alliance Boots in June 2012, one that is all but certain to result in a complete merger of the companies two years down the road, the new transaction immediately altered the equation in the drug wholesale sector in the United States.
In the process, the long-term strategic relationship forged by Walgreens, Alliance Boots and AmerisourceBergen brought home to many people — in a way that even the more comprehensive partnership between the first two companies didn’t — the fact that fundamental structural changes in the health care system are under way. The shift of $20 billion in Walgreens’ business to AmerisourceBergen vaults the latter past Cardinal Health into the No. 2 spot among U.S. pharmaceutical distributors and positions it to capitalize on increased scale and efficiencies.
The rise of AmerisourceBergen triggered intense speculation about how other players might respond. Should McKesson, the largest drug distributor by dollar sales, expand its direct involvement in retail pharmacy behind the 3,100 Health Mart stores it now franchises? Would CVS Caremark, Walgreens’ rival for supremacy in community pharmacy, benefit by acquiring a stake in a pharmaceutical wholesaler? How do AmerisourceBergen’s existing retail customers view its new association with Walgreens and Alliance Boots?
The varied responses to those questions point to a larger truth — the combination of demographic, financial and political pressure that currently confronts health care providers and payers has unleashed a wave change that is altering the status quo. Walgreens’ dramatic moves over the past 12 months are only the continuation of a trend that goes back at least as far as CVS’ 2007 merger with Caremark, one that has touched drug makers, PBMs and most other health care providers.
As implementation of the Affordable Care Act unfolds and its implications become evident, the process is likely to accelerate and result in further realignment in the way health care is administered and delivered.