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    The tiny alternative to the pharmacy megamerger

    David StanleyDavid StanleyBy now you've probably heard about the latest and probably last megamerger in the American drugstore business, as Walgreens has agreed to buy No. 3 player Rite Aid, paying out $9.4 billion to Rite Aid shareholders, a 48% premium over the stock's closing price the day before the deal was announced.

    See also: Pharmacy tales: The man who out-Shkrelied Shkreli

    What you probably haven't heard at any time in your pharmacy career is a customer asking for fewer choices on where to fill his or her prescriptions. And I doubt you've ever heard a pharmacist or pharmacy technician getting excited over the fact that the number of executives setting the agenda for workplace conditions is about to go down.

    Another big deal

    We’ve already seen how this works. All you need to do is look at the last big deal in the pharmacy world, which involved the No. 1 customer-rated mass-merchant-run pharmacy and the drug chain that came in next to last in its category, according to J.D. Power's 2015 Customer Satisfaction Index. Guess which company will be running the deal's combined pharmacies?

    See also: Community pharmacy's secret weapon

    That's right, it’s the one customers said they preferred least. So they won’t exactly be thrilled with the consequences of the next big merger, when the two least popular pharmacy chains will control — according to USA Today — 99.4% of pharmacy/drugstore revenue.

    The remaining pharmacy outlets add up to an “other” category of just 0.6%. That’s hardly more than a rounding error.

    Evidently the pharmacy business is destined to follow in the footsteps of the cable, cell-phone, airline, and hospitality businesses. And don’t forget the way stand-alone community hospitals have been inhaled into ever-expanding healthcare systems. As the song goes, everybody’s doin’ it.

    The fallout

    So what’s the effect on the customer who needs to fill an Rx? The players in this latest merger will of course bring out their standard arguments about how the combined company will be able to cut costs and pass those savings along to the people at their counters.

    How likely is that? Try a little experiment. Pick out a few of today’s most common prescription medications, then call around town to ask for pharmacy prices. You'll probably spend a lot of time on hold, but I can almost guarantee you that when you're done, you’ll find that the companies with the biggest “scale” will not be the ones selling their product for the lowest price.

    The ability to extract more money from a PBM is no assurance that any savings will appear at the cash register.

    David Stanley, RPh
    David Stanley is a pharmacy owner, blogger, and professional writer in northern California. Contact him at [email protected]


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