Walgreen’s vs. CVS PBM Ownership

Another question I got yesterday was on retailers (specifically Walgreen’s versus CVS) owning PBMs.  The question was since they make so much money on foot traffic and selling non-pharmacy items why would they want to be in the PBM business.  DATA!

They both have similar fundamental concepts which are aggregating patient touchpoints – PBM, Clinic, Retail, Specialty.  If they can figure out how to aggregate and mine the data to better serve the patients and the plan sponsors, they can be a key influencer in driving health outcomes.  

The follow on question was what’s different.  Without getting into behind the scenes, the one thing that I think is publicly different is the CVS ExtraCare program.  They have a loyalty program that gives them visibility into the non-medical behavior of members.  Why is that important?  From a PBM perspective, it’s important because they can make sure to focus on channel optimization.  By that I mean that people that go to the pharmacy and shop at a CVS are people they want to keep in the stores.  But, patients that simply pick up prescriptions are probably people they want to move to mail.  Mail order is a lower cost fulfillment option for them and if those consumers aren’t buying other stuff, then they should look to convert them to mail.

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