Albertsons and Rite Aid both fill prescriptions, so it makes sense the grocery store chain that also owns pharmacies would be interested in buying a drugstore operator.
But Albertsons is also an employer with 280,000 employees from supermarkets that use a Rite Aid-owned pharmacy benefit manager (PBM) for worker prescription drug benefits. Once Albertsons completes its purchase of the remaining 2,500 Rite Aids that Walgreens Boots Alliance isn’t buying, the grocer will also own EnvisionRx, a PBM that manages the supermarket chain’s employee drug coverage.
It could be a path for Amazon to follow if the online retailer wants to buy the PBM it uses to help manage its employee drug costs. The PBM Express Scripts has Amazon as a client.
It’s the kind of deal that has already been speculated for the online retailer Amazon, which last month announced it was creating a healthcare company with Warren Buffett’s Berkshire Hathaway and JPMorgan Chase & Co. The three said they are forming an “independent company” to improve healthcare and lower costs for their hundreds of thousands of U.S. employees.
Some analysts and media pundits have been speculating for months that Amazon will at least take a look at Express Scripts. A deeper Amazon relationship with Express Scripts could be a beachhead to expand into pharmacy and retail healthcare .
On the day Amazon announced it was forming a healthcare company with Berkshire and JPMorgan, the Express Scripts CEO said he wanted to hear more from Amazon. “We look forward to hearing more about this new initiative and how we can work together to improve health care for everyone,” Tim Wentworth, the CEO of Express Scripts said. Express Scripts reports its fourth quarter 2017 earnings this week and is expected to provide an update on its business strategy and outlook for 2018.
Amazon and its partners said the initial focus will be on “technology solutions” that will provide U.S. employees and their families with “simplified, high-quality and transparent healthcare at a reasonable cost.” The statement didn’t disclose many details about the venture, saying it was in the “early planning stages,” with executives acknowledging healthcare’s many complexities.
Amazon, which bought its own grocery chain when it purchased Whole Foods, is also reportedly interested in getting into the medical supply business and CNBC reported last week the online retailer was getting into the business of selling over-the-counter health products.
Albertsons, best known for its grocery brands, is interested in buying the remaining Rite Aid pharmacies to get more foot traffic into its stores as well as grow the larger prescription business that will be created. The combination of Rite Aid and Albertsons will have 4,350 pharmacies across 38 states and Washington D.C.
But like Amazon, Albertsons is also looking to get a better deal on healthcare costs for its employees. And even though Albertsons knew the prescription business given the hundreds of pharmacies in its stores, it doesn’t own a PBM.
“This gives us great confidence in our ability to successfully bring our two companies together and realize the full potential of the combination for our customers, employees, partners and shareholders,” Albertsons CEO Robert Miller said of the grocery store chain’s merger with Rite Aid.