These three R.Ph.s say Walgreens adds insult to injury

June 19, 2006

A letter from Walgreens' head of acquisitions asking whether Part D has them ready to sell out has outraged some independent pharmacy owners. They believe the chain's own pharmacy benefit manager is one reason they're being hurt financially by the Medicare drug benefit.

A letter from Walgreens' head of acquisitions asking whether Part D has them ready to sell out has outraged some independent pharmacy owners. They believe the chain's own pharmacy benefit manager is one reason they're being hurt financially by the Medicare drug benefit.

The letter was reportedly sent to several independent pharmacy owners in Florida and Texas in May. It was written by Robbie Jacobs, Walgreens pharmacy acquisition manager. The chain has a wholly owned subsidiary, Walgreens Health Initiatives (WHI), which is the PBM for the AARP-United Healthcare partnership-the largest Part D drug plan.

"In today's challenging pharmacy environment of Medicare and Medicaid changes, pharmacist shortages, and shrinking margins, many independent owners have begun to think about the possibility of selling their pharmacy business," Jacobs wrote. "... I would like you to know that I welcome the opportunity to discuss the purchase of your business as well as your potential employment with us."

A Walgreens letter landed in the mailbox of Nicholas Saraniti, director of operations, Commcare Pharmacy, Fort Lauderdale, Fla. He said the missive came to him as the owner of a pharmacy that exists only on paper. He had to put plans to open the new operation on hold for a few months due to Part D cash flow problems. He said the only way owners could have been targeted is through state pharmacy licensure numbers. He added that he checked with other owners in south Florida to confirm that he wasn't the only recipient of the letter.

"I love how WHI controls our cash flow and reimbursement rates," Saraniti said. "Now that they have both been effectively killed, they are interested in purchasing independent pharmacies. These people really have some nerve!"

The Walgreens letter "stinks to high heaven," said Clifton Osbon, R.Ph., Transcript Pharmacy, a specialty pharmacy in Flowood, Miss. Although he did not receive the buyout letter, he added, "It would be unethical to restrain a business' cash flow, then offer to purchase it."

Although some may be upset, 99% of the owners who responded to Walgreens' solicitation letter have given "very positive feedback," said spokesman Michael Polzin. He said he doesn't know how many letters were sent or how many pharmacies have been purchased since Part D began on Jan. 1. "Quite a few [owners] have expressed interest in talking with us," he said. "Many didn't know we were interested in buyouts. As we talk to them, they like that we're open to hiring them and their staff. It's a very attractive alternative to many."

As an owner who was riled by the Walgreens letter, Saraniti wrote to the Centers for Medicare & Medicaid Services to complain, but he has yet to receive a response. "This is clearly a case of a plan/PBM attempting to capitalize on the havoc the Medicare Part D cash flow situation has caused independent pharmacies," he wrote. "I choose not to believe that CMS ... will continue to sit idly by and allow this kind of behavior to continue."