Blog Coverage Walgreens Boots Alliance Partners with Prime Therapeutics for a Bigger Slice of the Prescription Drug Market

LONDON, UK / ACCESSWIRE / August 30, 2016 / Active Wall St. blog coverage looks at the headline from Walgreens Boots Alliance, Inc. (NASDAQ: WBA) announced a strategic partnership with pharmacy benefit manager (PBM) Prime Therapeutics on August 29, 2016 to form a new retail pharmacy network that combines mail order and speciality pharma business. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Walgreens Boots Alliance is the largest retail pharmacy, health and wellbeing enterprise in the US and Europe. It was created through the combination of Walgreens and Alliance Boots in December 2014. Prime Therapeutics LLC (Prime) is collectively owned by 14 Blue Cross and Blue Shield Plans, subsidiaries of those plans and serves over 22 million people.

Terms of the deal

Walgreens Boots Alliance and Prime will combine their speciality and mail-order businesses to form a new retail network of pharmacies. The combined entity will be jointly owned by Walgreens Boots Alliance and Prime, and will have a separate management team and Board of Directors. The team members will be chosen jointly by Walgreens Boots Alliance and Prime and their respective names will be announced at a later date. The deal also confirms better sharing of data between the two entities for cost-control and management of patient’s health. The duration of the deal is estimated to be around 10 years which is contrary to industry alliances that are usually for a much shorter duration. The combined company will be consolidated by Walgreens Boots Alliance, Inc., the parent company of Walgreens, in its financial statements. The financial terms of the deal were not disclosed, however, it is expected to close in the first half of 2017.

Alex Gourlay, Co-Chief Operating Officer of Walgreens Boots Alliance said:

“Walgreens has a long history of working with our business partners to create new solutions to help improve access and patient care and we look forward to providing a differentiated and patient-led pharmacy experience to more Prime members.”

Jim DuCharme, CEO and President of Prime said:

“With costs rising at unsustainable rates, we must take strong and decisive action to make health care more affordable. We’re trying to apply the brakes to this run-away freight train of rising drug costs by aligning the cost control expertise of the trusted Blue + Prime model with Walgreens supply chain capabilities and sending a message that we are on board with finding a solution to this issue.”

Aggressive growth plans

Walgreens Boots Alliance has already tied up with PBMs Express Scripts Holding Co. and in March 2016, the company also announced a partnership with UnitedHealth Group Inc.’s PBM – OptumRx. Walgreens Boots Alliance is also in advanced talks for acquisition with drug store chain Rite Aid Corp., through which it would get access to Rite’s PBM EnvisionRx. The deal is expected to close within this year.

Benefits of the deal

The new business aligns pharmacy, PBM, and health plans to coordinate patient care, improve health care outcomes for patients. Walgreens Boots Alliance will become the preferred national pharmacy network for Prime from January 1, 2017. Through its access to millions of customers, Walgreens Boots Alliance will be in a better position to bargain with drug manufacturers and insurance companies when purchasing drugs, thereby reducing costs. Under the arrangement, clients of Prime can access Walgreens Boots Alliance’s pharmacy network and get their prescriptions filled up at a cheaper price.

Market reaction

Shares of Walgreens Boots Alliance were up 1.21% finishing the trading session at $80.35 on August 29, 2016. A total volume of 3.45 million shares were traded during the market session. The company’s stock price has advanced 1.85% in the past one month and 4.28% in the last three months.

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