- Drugstore operator Walgreens Boot Alliance and Humana are in talks to partner, possibly by taking equity stakes in each other, The Wall Street Journal reports, indicating a deal wouldn't necessarily involve a complete merger.
- A deal would expand the existing relationship between the companies. This year they opened two senior-focused care centers in Walgreens stores in Kansas City, Missouri, to serve Medicare patients. The partnership provides in-person primary care, pharmacy services and health plan guidance.
- The talks come as Walgreens rival CVS is about to close its takeover of Aetna, which was expected to become final just before Thanksgiving but has since been pushed back.
The potential partnership between fifth-largest U.S. payer Humana and Walgreens furthers a trend seen over the past year as health plans tie themselves more closely to the pharmacy sector in an attempt to stave off competitive threats.
Last year, CVS announced its nearly $70 billion deal to acquire Aetna. Some suggested the tie-up was partly motivated by the chance for the new company to shield itself from the threat of Amazon, which was securing wholesale pharmacy licenses in multiple states.
A few months later another payer, Cigna, said it would acquire pharmacy benefit manager Express Scripts in a $67 billion deal.
As payers and PBMs unite, it has dramatically shifted the industry, ending an era when standalone pharmacy benefit managers dominated the industry. Now the major payers would all have PBMs under their umbrella.
Some that consolidation was likely done with an eye to Amazon. Earlier this year, Amazon officially launched itself into the pharmacy space by purchasing PillPack, an online pharmacy that ships pre-sorted medication to 49 states.
Industry experts warned that the deals left rivals with nowhere to hide.
"The pharmacy business model is under more direct attack from disruptive players than are health plans," Jefferies analysts wrote in a Nov. 20 note to investors.
Partnering with Humana may help Walgreens build market share, while gaining access to a retail footprint could also help strengthen Humana's brand and improve its ability to market directly to prospective customers, they said.
Earlier this year, big-box retailer Walmart was in early talks to buy Humana, according to The Wall Street Journal. So far, nothing official has come from those reported conversations.