Walgreens Investing in Future Growth of Health System Specialty Pharmacies

Walgreens Boots Alliance (WBA) and Shields Health Solutions announced that WBA, through its wholly-owned subsidiary, Walgreen Co., is making a majority investment in Shields, an industry leader in integrated, health system-owned specialty pharmacy care.

The approximately $970 million investment will support the continued growth of Shields’ health system-based specialty pharmacy strategy, and builds on a minority equity investment that WBA announced in July 2019.

The new investment gives WBA approximately 71 percent ownership of Shields, with an option to acquire the remaining equity interests in the future. Shields’ other equity holders will also have the option to require WBA to purchase the remaining equity interests, under the agreement.

Over the last two years, Shields has rapidly expanded its platform, representing more than 1 million specialty patients across more than 30 disease states, with more than 70 health system partners nationwide.

Health systems continue to make significant inroads into the specialty pharmacy market, with more than two-thirds of multi-hospital systems launching programs in a recent five-year period. But despite those gains, the sector still faces major roadblocks, including a lack of access to limited distribution drugs (LDDs) and payor contracts, according to ASHP’s inaugural National Survey of Health-System Specialty Pharmacy Practice.

AMI’s Specialty Pharmacy Database shows an increasing number of pharmacies being launched by hospitals and health systems which currently comprise approximately 35% of the specialty pharmacies in our Specialty Pharmacy Database.

Following the completion of the majority investment, Shields will continue to operate as it does today, managed under current executive leadership and as a distinct brand and entity. Hospitals hire Shields to set up the pharmacies, and Shields takes up to 30% of the revenue as its fee, according to the Boston Globe.

The companies will also explore opportunities to scale the Shields business model by adding complementary provider-based services to the portfolio over time. All of Shields’ current investors, including private equity firm Welsh Carson, Anderson & Stowe (WCAS) and founder and Board Chairman Jack Shields, will remain shareholders.

Takeaway: Hospital-owned specialty pharmacies make it easier for patients to use the hospital pharmacy for their specialty medications without the risk of being excluded by  PBMs from insurance networks