CA AG looking at pharmacy aspect of Kroger Albertsons merger

[storewanderer]

This is a potential issue.
https://www.reuters.com/markets/deals/c ... 023-08-18/

Kroger has a tract record in California from a previous decision to close the few pharmacies (think it was less than 20) in the F4L and FoodsCo (think Salinas was the only one) units.

Also very likely divested stores buyers Save Mart and Raleys both have a tract record of pharmacy closures so that is another problem. Raleys at least has some pharmacies open still.

Other states need to seriously look into this. Between hundreds of store closures at CVS, Walgreens, and Rite Aid on the brink, plus various grocers exiting the pharmacy business, this is an issue in a lot more places than just CA.

[Alpha8472]

The real problem is the greedy insurance companies that are putting small mom and pop pharmacies out of business. The insurance companies in the past few years have reduced reimbursement rates for many drugs. Now pharmacies lose money on many drugs.

Mom and pop and smaller pharmacy chains are losing money like crazy. They are being forced to close. The only profitable thing at pharmacies now are vaccinations. You get a profit on the flu shot, shingles shot, etc. (not COVID).

The big chains such as CVS and Walgreens can fill prescriptions in bulk and barely get by, but they have to push tons of vaccines. CVS can get by because they own CVS health and can give favorable rates to CVS pharmacies. The other chains are suffering.

What we need is legislation to force the insurance companies and PBMs to pay a fair rate for medications. The insurance company forces a pharmacy to accept their insurance but only pays part of the cost of the drugs.

For example the insurance pays $900 for a certain brand drug prescription. It costs the pharmacy $1200 to buy it from the distributor. The pharmacy loses $300. How is this legal? The pharmacy would rather shut down than lose that much money every time they fill a prescription.

The insurance companies want to kill off all the pharmacies and force everyone to use mail order pharmacies owned by the insurance companies.

This is why Save Mart closed their pharmacies. It is a money losing business unless you just do vaccinations all day long.

This is a dangerous time for mom and pop pharmacies. They are all closing down to keep from going into debt.

[storewanderer]

Meanwhile I read that BS CA is leaving CVS Caremark PBM and expects to save $500 million per year by going through Amazon, Mark Cuban's thing, and some other company I've never heard of before. Do those networks allow retail store fills or are they going to get all of this cost savings by pushing mail order? If that actually works I would expect to see a repeat of this play out across various health plans. I am unclear how this will impact CVS. Will people still go to the physical CVS for scripts but they won't run through Caremark so CVS will miss out on the profit at the Caremark level but will still get the profit on the pharmacy retail sale (if there is any profit..).

[Alpha8472]

Blue Shield will force Blue Shield patients to get their drugs through Amazon pharmacy home delivery.

The exception are drugs that Amazon does not carry such as vaccinations, suspensions (liquids), refrigerated medications, controlled drugs (narcotics), and specialty drugs. Specialty drugs are the expensive drugs that include the ones where pharmacies lose money.

So Amazon pharmacy shows its weaknesses. They are saying they don't carry the specialty medications that lose money. The fact is that Amazon could stock those medications, they just know they would lose money on them and go into debt.

So Amazon is dumping the money losing medications on other pharmacies (on any brick and mortar pharmacy that accepts CVS Caremark insurance). This includes opiods: Oxycontin, Norco, promethazine with codeine, etc.

The real secret is that CVS has used up its allotment of Norco (an opioid pain medication). Many CVS pharmacies in the San Francisco Bay Area are not accepting Norco prescriptions because they have used up their entire permitted allotment of Norco and other opioid medications (oxycontin).

Now CVS is dumping these opioid patients on other pharmacies.

Same story again. CVS is dumping money losing prescriptions on Mom and Pop pharmacies which will cause them to go into debt and close. Other chains such as Walgreens, Rite Aid, etc. will lose money on these prescriptions too.

Ultimately the average patient will suffer. If you need an epipen, blood clot drug, or nitroglycerin heart attack medication you will need to use Amazon home delivery. If you can't wait you would have to pay full price at a brick and mortar pharmacy.

Maybe Blue Shield might make an exception and allow a one time emergency fill at a brick and mortar. Your life depends on these medications. You shouldn't have to choose between waiting for home delivery or paying full price.

However, this is all about the insurance companies trying to cut costs and forcing patients to use home delivery.

Amazon's goal is to kill off brick and mortar and mom and pop pharmacies. This looks like it will accelerate that.

[veteran+]

My insurance broker knew all this was going to happen with Blue Shield and switched me over to United Health.

All my care is with UCLA Medical and B/S wanted to change the terms (reducing patient benefits amongst other things). UCLA said NO, bye bye!

[SO_CAL_RETAIL_SLUT]

Meanwhile I read that BS CA is leaving CVS Caremark PBM and expects to save $500 million per year by going through Amazon, Mark Cuban's thing, and some other company I've never heard of before. Do those networks allow retail store fills or are they going to get all of this cost savings by pushing mail order? If that actually works I would expect to see a repeat of this play out across various health plans. I am unclear how this will impact CVS. Will people still go to the physical CVS for scripts but they won't run through Caremark so CVS will miss out on the profit at the Caremark level but will still get the profit on the pharmacy retail sale (if there is any profit..).

For Blue Shield of California, another impact - or maybe reason for the PBM change was pressure by CALPERS to reduce costs. Of course not all of the plans from Blue Cross CA are CALPERS, but Blue Cross participates in Covered California as well as some union trust and employer sponsored plans - but their number one customer is CALPERS.

Similar to Kroger's and GoodRx breaking up, PBM's costs/fees are becoming too expensive. Kroger's RFP'd other suppliers in the PBM space who are willing to reduce costs. GoodRX lost out.

Going back to Blue Cross, they will have a big hole to "fill"...lol with CVS out of the network. When you include Target in the mix, CVS has so many locations throughout California - remnants of Sav-On and Longs, plus newer build stores and Target that have been added to their California store base. I think it is going to be much more inconvenient to fill these scripts if you are a Blue Cross member in areas where neither CVS or Target are available to use - and other pharmacies are not very nearby or as accessible.

SO_CAL_RETAIL_SLUT

[Alpha8472]

The problem is that Amazon is putting mom and pop pharmacies out of business. In addition, supermarket pharmacies are also closing. This leaves little choice with regard to pharmacies.

No one wants to be stuck having to drive miles just to find a pharmacy.

This merger could result in many supermarket pharmacies closing.

The blame is on Amazon and the greedy insurance companies who are trying to put retail pharmacies out of business so that customers are forced to use mail order pharmacies run by the insurance companies.

If laws were passed that required insurance companies to cover medications so that pharmacies do not lose money when filling prescriptions. There needs to be regulations requiring insurance companies to fairly reimburse pharmacies so that no prescription is a loss to the pharmacy.

Once the pharmacy is no longer losing money, then supermarkets will be able to reopen pharmacies or add more of them.

[SO_CAL_RETAIL_SLUT]

The problem is that Amazon is putting mom and pop pharmacies out of business. In addition, supermarket pharmacies are also closing. This leaves little choice with regard to pharmacies.

No one wants to be stuck having to drive miles just to find a pharmacy.

This merger could result in many supermarket pharmacies closing.

The blame is on Amazon and the greedy insurance companies who are trying to put retail pharmacies out of business so that customers are forced to use mail order pharmacies run by the insurance companies.

If laws were passed that required insurance companies to cover medications so that pharmacies do not lose money when filling prescriptions. There needs to be regulations requiring insurance companies to fairly reimburse pharmacies so that no prescription is a loss to the pharmacy.

Once the pharmacy is no longer losing money, then supermarkets will be able to reopen pharmacies or add more of them.

Has Kroger's publicly announced that any pharmacy locations will be closing? I don't know about ABS, but KR's current nationwide pharmacy marketshare is less than 3%. Combined with ABS, it's still less than Walmart. Is KR's current pharmacy operation impactive? Yes and no - depends on location and whether or not you as the customer will be affected if C&S elects to exit the pharmacy business.

Not to go off subject - the public announcement by KR as to the number of locations they themselves have chosen to divest may not equate to what the F.T.C. actually approves IF the acquisition is approved.

So, let's say the deal is approved by the F.T.C., with conditions. It very well may be that the F.T.C. places a "fence" around the pharmacy locations, and requires C&S to operate certain pharmacy locations for a number of years - let alone to any agreements with various state Attorney General's that may require additional conditions.

Without conditions, I could see C&S shuttering the acquired pharmacies, and selling the patient scrip files to Wag's and/or CVS, similar to what Southeastern Grocers is doing - shuttering their RX business before Aldi takes over.

If as expected RAD craters, and files BK, rumor is RAD intends to shutter their entire west coast store base, including recently acquired Bartell's. Will the F.T.C. add more conditions to the pharmacy operation of C&S if RAD shuts down on the west coast, or for that matter - the entire chain? What about my Thrifty ice cream?

This is for another topic, I don't foresee C&S to be in this for the long haul, especially along the west coast and Alaska markets. Most likely outcome - sell the stores to another operator, or if the agreement allows, franchise the stores to independent operators - while maintaining supply agreements using the acquired warehouses, or just close the remaining stores that could not be sold and sell the real estate. This will give C&S their exit from the west coast, and KR and its shareholders will be smiling all the way - along with all the other "helpers" that will be paid to get the deal done, if approved.

I'll go out even further, C&S will most likely divest/outsource the acquired warehouses.

This deal has Haggen and National Supermarkets (St.Louis/New Orleans) written all over it - failure for the stores that KR proposes to divest.

At locations where the UFCW, Teamsters and other unions have bargaining agreement(s) in place - my advice, hold on tight as your members will probably face the brunt of what's coming down the road during the next 12 to 18 months.

As far as Amazon, I agree to a point. Amazon stays clear away from specialty pharmacy products and/or those with certain diseases that the specialty pharmacies of CVS and WAG's manage quite well - but are not very profitable. So, Blue Cross CA will have to implement a plan for those insureds that need/depend on specialty pharmacy products.

SO_CAL_RETAIL_SLUT

[norcalriteaidclerk]

The problem is that Amazon is putting mom and pop pharmacies out of business. In addition, supermarket pharmacies are also closing. This leaves little choice with regard to pharmacies.

No one wants to be stuck having to drive miles just to find a pharmacy.

This merger could result in many supermarket pharmacies closing.

The blame is on Amazon and the greedy insurance companies who are trying to put retail pharmacies out of business so that customers are forced to use mail order pharmacies run by the insurance companies.

If laws were passed that required insurance companies to cover medications so that pharmacies do not lose money when filling prescriptions. There needs to be regulations requiring insurance companies to fairly reimburse pharmacies so that no prescription is a loss to the pharmacy.

Once the pharmacy is no longer losing money, then supermarkets will be able to reopen pharmacies or add more of them.

Has Kroger's publicly announced that any pharmacy locations will be closing? I don't know about ABS, but KR's current nationwide pharmacy marketshare is less than 3%. Combined with ABS, it's still less than Walmart. Is KR's current pharmacy operation impactive? Yes and no - depends on location and whether or not you as the customer will be affected if C&S elects to exit the pharmacy business.

Not to go off subject - the public announcement by KR as to the number of locations they themselves have chosen to divest may not equate to what the F.T.C. actually approves IF the acquisition is approved.

So, let's say the deal is approved by the F.T.C., with conditions. It very well may be that the F.T.C. places a "fence" around the pharmacy locations, and requires C&S to operate certain pharmacy locations for a number of years - let alone to any agreements with various state Attorney General's that may require additional conditions.

Without conditions, I could see C&S shuttering the acquired pharmacies, and selling the patient scrip files to Wag's and/or CVS, similar to what Southeastern Grocers is doing - shuttering their RX business before Aldi takes over.

If as expected RAD craters, and files BK, rumor is RAD intends to shutter their entire west coast store base, including recently acquired Bartell's. Will the F.T.C. add more conditions to the pharmacy operation of C&S if RAD shuts down on the west coast, or for that matter - the entire chain? What about my Thrifty ice cream?

This is for another topic, I don't foresee C&S to be in this for the long haul, especially along the west coast and Alaska markets. Most likely outcome - sell the stores to another operator, or if the agreement allows, franchise the stores to independent operators - while maintaining supply agreements using the acquired warehouses, or just close the remaining stores that could not be sold and sell the real estate. This will give C&S their exit from the west coast, and KR and its shareholders will be smiling all the way - along with all the other "helpers" that will be paid to get the deal done, if approved.

I'll go out even further, C&S will most likely divest/outsource the acquired warehouses.

This deal has Haggen and National Supermarkets (St.Louis/New Orleans) written all over it - failure for the stores that KR proposes to divest.

At locations where the UFCW, Teamsters and other unions have bargaining agreement(s) in place - my advice, hold on tight as your members will probably face the brunt of what's coming down the road during the next 12 to 18 months.

As far as Amazon, I agree to a point. Amazon stays clear away from specialty pharmacy products and/or those with certain diseases that the specialty pharmacies of CVS and WAG's manage quite well - but are not very profitable. So, Blue Cross CA will have to implement a plan for those insureds that need/depend on specialty pharmacy products.

SO_CAL_RETAIL_SLUT

I find the assertion of a potential West Coast exit by RAD rather dubious at best(whether the Murdoch-instigated bankruptcy rumors truly have any credence or not).The West Coast has been what been keeping the company relevant;and among the roughly 100 chainwide closures that have occurred within the past month, maybe about 25-30 have occurred in the Western states.

In any case,there are many other things wrong with this 'krogersons' merger besides the fate of in-store pharmacies in whichever locations are divested given the FTC even allows this behemoth combination to be created.

[SO_CAL_RETAIL_SLUT]

The problem is that Amazon is putting mom and pop pharmacies out of business. In addition, supermarket pharmacies are also closing. This leaves little choice with regard to pharmacies.

No one wants to be stuck having to drive miles just to find a pharmacy.

This merger could result in many supermarket pharmacies closing.

The blame is on Amazon and the greedy insurance companies who are trying to put retail pharmacies out of business so that customers are forced to use mail order pharmacies run by the insurance companies.

If laws were passed that required insurance companies to cover medications so that pharmacies do not lose money when filling prescriptions. There needs to be regulations requiring insurance companies to fairly reimburse pharmacies so that no prescription is a loss to the pharmacy.

Once the pharmacy is no longer losing money, then supermarkets will be able to reopen pharmacies or add more of them.

Has Kroger's publicly announced that any pharmacy locations will be closing? I don't know about ABS, but KR's current nationwide pharmacy marketshare is less than 3%. Combined with ABS, it's still less than Walmart. Is KR's current pharmacy operation impactive? Yes and no - depends on location and whether or not you as the customer will be affected if C&S elects to exit the pharmacy business.

Not to go off subject - the public announcement by KR as to the number of locations they themselves have chosen to divest may not equate to what the F.T.C. actually approves IF the acquisition is approved.

So, let's say the deal is approved by the F.T.C., with conditions. It very well may be that the F.T.C. places a "fence" around the pharmacy locations, and requires C&S to operate certain pharmacy locations for a number of years - let alone to any agreements with various state Attorney General's that may require additional conditions.

Without conditions, I could see C&S shuttering the acquired pharmacies, and selling the patient scrip files to Wag's and/or CVS, similar to what Southeastern Grocers is doing - shuttering their RX business before Aldi takes over.

If as expected RAD craters, and files BK, rumor is RAD intends to shutter their entire west coast store base, including recently acquired Bartell's. Will the F.T.C. add more conditions to the pharmacy operation of C&S if RAD shuts down on the west coast, or for that matter - the entire chain? What about my Thrifty ice cream?

This is for another topic, I don't foresee C&S to be in this for the long haul, especially along the west coast and Alaska markets. Most likely outcome - sell the stores to another operator, or if the agreement allows, franchise the stores to independent operators - while maintaining supply agreements using the acquired warehouses, or just close the remaining stores that could not be sold and sell the real estate. This will give C&S their exit from the west coast, and KR and its shareholders will be smiling all the way - along with all the other "helpers" that will be paid to get the deal done, if approved.

I'll go out even further, C&S will most likely divest/outsource the acquired warehouses.

This deal has Haggen and National Supermarkets (St.Louis/New Orleans) written all over it - failure for the stores that KR proposes to divest.

At locations where the UFCW, Teamsters and other unions have bargaining agreement(s) in place - my advice, hold on tight as your members will probably face the brunt of what's coming down the road during the next 12 to 18 months.

As far as Amazon, I agree to a point. Amazon stays clear away from specialty pharmacy products and/or those with certain diseases that the specialty pharmacies of CVS and WAG's manage quite well - but are not very profitable. So, Blue Cross CA will have to implement a plan for those insureds that need/depend on specialty pharmacy products.

SO_CAL_RETAIL_SLUT

I find the assertion of a potential West Coast exit by RAD rather dubious at best(whether the Murdoch-instigated bankruptcy rumors truly have any credence or not).The West Coast has been what been keeping the company relevant;and among the roughly 100 chainwide closures that have occurred within the past month, maybe about 25-30 have occurred in the Western states.

In any case,there are many other things wrong with this 'krogersons' merger besides the fate of in-store pharmacies in whichever locations are divested given the FTC even allows this behemoth combination to be created.

Did Mr. Murdoch "instigate" a rumor? If you're referring to the article penned by three WSJ reporters on August 25, 2023, file formal complaint(s) with their editor at Dow Jones. I hardly doubt that the WSJ is reporting "rumors". Possibly, RAD's restructuring counsel, Kirkland & Ellis can share some details about their clients intentions.

SO_CAL_RETAIL_SLUT