Walgreens Boots Alliance Inc (WBA)

[big-yank]

Are we moving toward cafeteria-style PBM networks? My analysis of Paz's comments, the Tri-Care exclusion of Walgreens from the ESRX settlement and Lisa Gill's enlightened spin all lead me to conclude that this is the new PBM direction with regard to higher cost providers: let the customer decide if they wish to pay more for more expensive delivery of healthcare.

I think we all comprehend the momentum underpinning lowered reimbursement rates and improved healthcare cost metrics. This pressure is unlikely to abate as the entitlement deficit debate continues, irrespective of November's election results and whatever political capital that may accrue to either side of the aisle.

Cafeteria-style options was what virtually killed the HMO sector when people were clearly presented with having to pay the higher cost of upgraded networks and convenience of services. Could we be seeing the initial phase of such an approach entering the Rx market? The first true confirmation of this will be either another major player like Tri-Care opting out of Walgreens OR either UNH or CVS announcing a narrow network with a high-count insured system such as Calpers.

Thougts, anyone? This issue is HUGE in shaping the future of Walgreens and in interpreting whatever guidance that comes forward on 9/28 in the conference call.