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Walgreens has made a number of headlines lately, from closing more than 1,000 stores to paying a prescription fraud settlement to shifting away from its primary care strategy.
As the retail giant navigates industry pressures, such as low reimbursement rates and increased competition, which have caused its shares to drop 63% since the start of the year, Mary Langowski, EVP and president of US healthcare, spoke about the company’s strategy to turn things around during a session at the 2024 HLTH conference in Las Vegas on October 21.
Langowski—a former CVS executive who joined the company in March to replace then-EVP and president of US healthcare John Driscoll—said Walgreens is focused on “a number of things,” including streamlining the company’s portfolio of assets.
“We’ve been exiting over the last six months multiple different parts of the business that we judge to be not material enough,” she said. “They’re not going to grow enough, they’re not going to create shareholder value, and they’re not going to have enough of a scaled impact to help consumers.”
A new focus. Instead, the company is doubling down on what it considers its areas of growth, which Langowski said includes specialty pharmacy, data and analytics, and pharmacy and payer services.
Another key focus for the company is working with payers and pharmacy benefit managers (PBMs) to make sure that it is “buying drugs at a fair price and getting reimbursed at a fair price,” Langowski said during the panel.
For example, in today’s reimbursement model, pharmacists aren’t paid for services like counseling patients or preventing hospital readmissions, despite doing these things regularly, according to Langowski. Walgreens will no longer “engage in contracts where a payer expects us to do things for free or be underwater—we’re gonna take a hard stance on that,” she said.
In other news…Langowski also addressed during the session the news from August that the chain is considering selling off its VillageMD subsidiary just three years after acquiring it for $5.2 billion. She said Walgreens doesn’t see VillageMD “as a really key part of our future healthcare strategy.”
“We don’t think…that we need to be in brick-and-mortar healthcare with one partner. We would like to have arrangements with many, many partners out there,” Langowski said.
Walgreens is “working closely with [VillageMD] to figure out what’s the best growth path” for the company as well as what’s best for consumers, patients, current VillageMD providers, she added.
Langowski also commented on the recent trend of Big Pharma companies like Pfizer and Eli Lilly launching direct-to-consumer (DTC) services, saying she views it as manufacturers attempting to bypass PBMs.
“These are creative solutions for manufacturers to get to the consumers they’re serving directly,” she said. “But it is also incredibly fragmenting to expect a consumer to go to potentially five different manufacturer DTC websites to access their various therapies.”