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October 30, 2017

Toomer’s Drugs

Toomer’s Drugs sits on the corner of College Street and Magnolia Avenue. Old-growth southern oak trees provide afternoon shade to a visitor sitting on the bench outside the store enjoying a glass of Toomer’s world famous lemonade, one of only two things for sale there, the other being every conceivable piece of paraphernalia emblazoned with the blue and orange University of Auburn logo.

What you can’t get at Toomer’s is your prescription filled.

Founded by Shel Toomer, business slowed after 100 years and the shop closed up. A local couple bought the place and reopened it to keep the tradition alive, but who needed to sell medicines?  Lemonade and souvenirs made more sense.

I’d say that sounds like CVS, but they actually do still fill a lot of prescriptions.  However, it seems they want to sell us a lot more these days.

CVS has been busy, most significantly with the news that it is looking to buy Aetna.  The company said it doesn’t comment on rumors, but The Wall Street Journal is not The Onion. Its sources said talks have been going on for a couple of months.

Which is interesting, because just 12 days ago CVS announced its new five year partnership with IngenioRX, the new pharmacy benefits manager (PBM) formed by Anthem.  Remember, Anthem sued Express Scripts, their previous PBM partner, for $15 billion in damages.  Now they have their own PBM, which has a long term strategic relationship with CVS.  Who is in talks to buy Aetna.

Now, the rivalry between Aetna and Anthem is not as fierce as the Auburn Tigers and the Crimson Tide (Trump v North Korea is not as intense as things will be on when Alabama comes to town in November), but let’s just say that buying Aetna while partnering with Anthem would be more tricky.  That complexity and the likely objections the FTC would raise on this deal suggest this is not likely.  But it prompts us to take a look at CVS.

With almost 5 million people walking into one of their 9,600 pharmacies every day; with over 1,100 Minute Clinics in those pharmacies; with it OmniCare division being the country’s largest long term care pharmacy distributor; with its 80 million PBM members, CVS is already a major force in healthcare.  Partner with Anthem? Buy Aetna?  That is some serious lemonade.

Here are a few comments from CEO Larry Merlo in the announcement of the Anthem PBM partnership:

‘We believe that this agreement further validates the important role that CVS Health’s integrated and innovative pharmacy care model plays in today’s health care system…we look forward to providing services to help ensure coordinated, holistic care for their PBM members…we truly are the front door of health care…our pharmacists and nurse practitioners are able to engage in face-to-face personalized counseling and clinically-effective interventions that will enable us to help improve health outcomes and lower overall health care costs for Anthem and its members.’

Drug store or your competitor? 

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.