As their clinics sputter, Walgreens and Walmart are investing more in specialty pharmacies

As Walgreens and Walmart scale back their investments in physician-staffed health clinics, they are moving further into the lucrative specialty pharmacy sector.

Walmart said Tuesday it is closing its 51 Walmart Health centers in five states and Walmart Health virtual care, the retailer’s telehealth business. Instead, Walmart will ramp up its efforts in pharmacy and specialty pharmacy.

“While we will no longer operate health centers, we will leverage what we have learned to deliver trusted health and wellness services across the country through our nearly 4,600 pharmacies and more than 3,000 vision centers,” Walmart said in a blog post announces the end of its Walmart Health and Walmart Virtual Care businesses. “For 40 years, we have provided these high-quality, accessible and affordable points of care that are an integral part of their respective communities.”

Specialty pharmacies are an increasingly important player in the U.S. healthcare system, given the flood of expensive biotechnology-derived drugs on the market. Such medications are more complicated than pills and capsules you can buy at the corner drugstore and often require specialized administration, refrigeration, packaging and patient instructions.

Last week, Walgreens announced plans to launch Walgreens Specialty Pharmacy, a $24 billion company that integrates a new pharmacy equipped to handle gene and cell therapies with its existing pharmacy assets, including major specialty pharmacy and home delivery business AllianceRx.

Walgreens’ move, which takes effect Aug. 1 when AllianceRx Walgreens Pharmacy becomes Walgreens Specialty Pharmacy, comes as Walgreens CEO Tim Wentworth works on a financial turnaround focused on offering more health care services in its stores while strengthening the more lucrative aspects of the pharmacy. Under Wentworth, Walgreens has dramatically scaled back the opening of physician-staffed retail clinics with its partner VillageMD and is instead investing in pharmacies, specialty pharmacies and other more lucrative services.

Americans, their health insurers and employers now spend more on specialty medications than on pills, capsules and tablets. Specialty medications account for 1% to 2% of a typical employer’s total prescription volume, yet these medications account for about 50% of total annual pharmacy spending, according to employee benefits consulting firm Mercer.

Meanwhile, prescription costs are increasing overall costs for employer-based health insurance, thanks to new specialty drugs such as the weight-loss drug Ozempic and similar injectable specialty drugs. Weight-loss prescriptions from Wegovy, Rybelsus and Saxenda — along with the diabetes drug Ozempic, which is often used off-label for weight loss — increase employer health costs by more than $300 per insured worker, data released last fall show. released by benefits consultancy Aon.

Just this week, representatives from Walgreens, Walmart, CVS Health and Amazon were among the specialty pharmacy executives who flocked to Las Vegas for the 20th edition.^e annual Asembia AXS24 conference, which attracted more than 8,000 visitors. Asembia executives said the meeting has grown from “two dozen original participants who attended our first summit.”

“In recent years, the importance of pharmacies has continued to grow and we have expanded the clinical capabilities of the services we provide,” Walmart’s blog post said. “We continue to offer vaccinations and have expanded to provide testing and treatment services, access to specialty pharmacy medications and care, as well as other essential services such as medication therapy management and a variety of health screenings. With more than 4,000 of our stores in areas with a shortage of medical providers, our pharmacies are often the front door of healthcare.”