Walgreen Co., based in Deerfield, Ill., announced last Wednesday the sale of Walgreens pharmacy benefit management business, Walgreens Health Initiatives, to Catalyst Health Solutions Inc. of Rockville, Md., for $525 million in cash.
Walgreen Co., based in Deerfield, Ill., announced last Wednesday the sale of Walgreens pharmacy benefit management business, Walgreens Health Initiatives (WHI), to Catalyst Health Solutions Inc. of Rockville, Md., for $525 million in cash. The transaction, structured as an acquisition of all of the capital stock of WHI, is expected to be completed in the first half of 2011, according to a press release from Walgreens.
With the addition of WHI, Catalyst Health Solutions PBM membership will increase from approximately 7 million individuals to more than 18 million members, and its annual prescription volume is expected to more than double from approximately 80 million to more than 165 million prescriptions. In addition, Walgreens has selected Catalyst to provide PBM and related services for Walgreens employee and retiree prescription drug plans, as well as other Walgreens programs such as the Walgreens Prescription Savings Club.
“We believe WHI’s clients and members will benefit from our sole focus on excelling in providing PBM services,” said David T. Blair, CEO of Catalyst, in the Walgreens press release. “We are gaining WHI’s talented employees who have been integral to the growth and success of the business and are pleased to welcome them to the Catalyst team. Together, we will provide continuity for our valued customers and deliver marketing-leading services that will further improve health outcomes.”
For the Walgreens employees who are expected to join Catalyst as part of the transaction, Catalyst will maintain a significant presence in the Chicago area.
Walgreens will retain and look to continue growing its specialty pharmacy and mail service business, and will be providing those services in support of Walgreens, WHI, and Catalyst patients. “Our specialty, infusion, and mail pharmacy services are an extension of our drugstores, retail clinics, worksite health centers, and medical facility pharmacies,” said Greg Wasson, president and CEO of Walgreens in a company statement. “Together, these services and locations are part of our industry leading 8,000-plus points of care, and are on the frontline of helping millions of patients live well, stay well, and get well.”
Large PBMs may be a threat to big retail chains, who are concerned about the shift of retail volume to mail-order prescriptions, according to an article about the WHI sale published online last week by the St. Louis Business Journal. John Kreger, a healthcare analyst with William Blair & Co., based in Chicago, viewed the Catalyst aquisition as a “less threatening alternative and more as a partner than an adversary” for Walgreens, according to the business journal.