Current pushback in opposition to Walgreens’ choice to restrict distribution of an abortion drug is elevating questions on whether or not the controversy may have an effect on its progress technique, together with bold aspirations to change into a serious major care supplier.
Walgreens stated final week it might not promote mifepristone in 20 conservative-led states, following threats from attorneys common to take authorized motion if the pharmacy bought the abortion capsule by mail. The corporate stated it’s taking part in a certification course of that may enable it to dispense the drug “in any jurisdiction the place it’s legally permissible to take action.”
Walgreens’ state of affairs, nevertheless, is considerably complicated due to its strategic push into value-based major care by means of VillageMD, through which it took a majority curiosity after infusing one other $5.2 billion in 2021. By the top of 2022, Walgreens had opened greater than 150 clinics working as Village Medical and co-located with its shops to encourage collaboration between docs and pharmacists. The plan is to succeed in 1,000 Village Medical areas by 2027. VillageMD has a footprint in a number of states, together with Texas and Florida, the place attorneys common threatened authorized motion.
Whereas it is unclear how a lot the controversy will have an effect on Walgreens in the long run, it’s clear {that a} quickly altering healthcare panorama has difficult operational methods as soon as seen as black and white.
“For those who assume again to 6 or eight years in the past, when pharmacies have been pharmacies and hospitals have been hospitals and insurers have been insurers, you did not have these spillover kind of results,” stated David Dobrzykowski, affiliate professor and director of Walton School Healthcare Initiative on the College of Arkansas. “It makes these choices that you just may make in a single enterprise unit far more complicated, far more delicate and [with] implications that would probably spill over into different enterprise traces.”
It is also doable shoppers on the anti-abortion aspect of the argument may reply positively to Walgreens’ choice, he added.
VillageMD, the place Walgreens CEO Rosalind “Roz” Brewer has a board seat, continues to purchase major and specialty care doctor teams in a spread of geographies in addition to different property. In November, VillageMD introduced it might purchase Summit Well being-CityMD for $8.9 billion to develop into extra multispecialty care. Earlier this month, it introduced its acquisition of Rocky Hill, Connecticut-based Starling Physicians, one other major and multispecialty care group.
Walgreens has additionally invested billions of {dollars} in offers with dwelling well being firm CareCentrix and specialty pharmacy group Shields Well being Options.
Final week’s choice to restrict mifepristone dishing out roiled some pro-choice leaders, together with California Gov. Gavin Newsom (D), who stated Wednesday the state won’t renew a specialty pharmacy contract with Walgreens valued at $54 million that offered prescriptions to the state’s jail system.
A Walgreens spokesperson stated the corporate is “deeply disenchanted” by California’s choice to not renew the longstanding contract, which expires April 30.
“Walgreens is dealing with the identical circumstances as all retail pharmacies, and no different retail pharmacies have stated that they might method this case otherwise, so it’s unclear the place this contract would now be moved,” the spokesperson stated. “Our place has all the time been that, as soon as we’re licensed by the FDA, Walgreens plans to dispense mifepristone in any jurisdiction the place it’s legally permissible to take action, together with the state of California.”
A spokesperson for Newsom stated California is reviewing all agreements with Walgreens, following the governor’s social media publish on Monday saying the state would now not do enterprise with Walgreens.
Different giant retail pharmacies, akin to CVS or Kroger, have remained mum on the problem.
Some analysts say California may take away Walgreens from the pharmacy community in its state staff’ well being plan, though the timeline would depend upon the present contract. As of January, California had greater than 230,000 lively staff, together with authorities positions, universities and the Judicial Council, in line with the state controller’s workplace.
Lined California, one of many state’s public plans serving roughly 2 million folks, stated Tuesday it’s “working to find out the potential implications” of Newsom’s publish,” referring additional inquiries to the governor’s workplace. Medi-Cal, one other giant public plan with greater than 15 million licensed eligible members, declined to remark.
John Ransom, managing director of healthcare fairness analysis at Raymond James & Associates, views Newsom’s feedback as a political play, evaluating it to backlash beforehand skilled by Chick-fil-A, Interest Foyer Shops and, extra not too long ago, the Walt Disney Co. Shedding even a small quantity of market share might be vital given the extremely aggressive panorama amongst retail pharmacies, he stated.
However some trade watchers aren’t satisfied the present debacle could have long-term results on the corporate, which posted $132.7 billion in gross sales throughout its fiscal yr 2022, ended Aug. 31.
“It is onerous to say it is zero influence, however on the identical time, it is like how vital may that actually be? It is onerous to inform,” stated Brian Tanquilut, an analyst at funding banking agency Jefferies. “There’s the PR element of, by him making that announcement, it places the subject within the highlight.”
Retail pharmacies have been compelled to reassess insurance policies surrounding abortion treatment after the U.S. Meals and Drug Administration finalized a rule change in January permitting extra pharmacies, together with giant chains and mail-order corporations, to dispense mifepristone in the event that they undergo a certification course of. After the announcement, Walgreens and CVS stated they might assessment the change and cling to state and federal legal guidelines.
