Reimbursement Model and Margins
Q: Can Walgreens drive new reimbursement models and sustainable margins?
A: Walgreens believes it can play a significant role in shifting the reimbursement model by partnering with PBMs and health plans, focusing on value beyond unit cost ( " ). The sustainable margin per drug will largely depend on the services provided to patients, and Walgreens is confident in building value through its pharmacy services ( " ).

Strategic Focus and Core Business
Q: What is considered core to Walgreens' business and strategic focus?
A: The core business centers around the community-based retail stores, which are not on the table for change ( " ). Walgreens plans to optimize its footprint by closing about 200 stores this year ( " ). Key focus includes expanding pharmacy services, leveraging assets like CareCentrix and Shields, and investing in a health services strategy rather than acquiring more primary care assets ( " ).

Specialty Pharmacy Opportunities
Q: What opportunities exist for Walgreens in specialty pharmacy?
A: Walgreens sees significant potential in specialty pharmacy by leveraging its assets and partnerships like Shields ( " ). They are building capabilities in gene and cell therapy and have secured wins with large Blue Cross Blue Shield plans ( " ). Shields is a key enabler in their specialty strategy, working with health systems to manage patients and build networks ( " ).

Investment in Care Delivery Partnerships
Q: Will Walgreens expand access to care through partnerships like Pearl?
A: Yes, Walgreens intends to pursue more partnerships to expand access to care ( " ). They view investments like VillageMD as platforms to build and test services, and aim to be a preferred partner in various geographies ( " ).

Reimbursement Pressure and Floor on Unit Costs
Q: Has reimbursement pressure reached a floor, and can Walgreens drive fair reimbursement?
A: While there is very little left to cut in unit costs, Walgreens doesn't claim a floor has been reached ( " ). They believe that transitioning to a value-based model will help both PBMs and retailers, and they aim to help PBMs win by being a great payor partner ( " ).

Timeline for Implementing New Reimbursement Models
Q: How long will it take to implement new reimbursement models?
A: Material changes could occur within a year or two, with quicker uptake possible for mid-year small group sales ( " ). Employers' demand for transparent benefits is driving this change, and Walgreens aims to be paid fairly for the services they provide ( " ).

Pharmacy Market Growth Expectations
Q: Why are pharmacy market growth expectations lower now?
A: The overall prescription market growth is expected to slow by about 50 basis points compared to previous estimates ( " ). This is driven by a weaker respiratory season and the continued impact of Medicaid redetermination ( " ).

Owning a PBM vs. Partnering
Q: Should Walgreens own a PBM to benefit its business?
A: Walgreens does not see owning a PBM as the best path ( " ). They prefer to remain independent and work across the ecosystem, leveraging the value that large PBMs bring through scale ( " ).

Lilly Direct Program Impact
Q: How will Lilly's new Lilly Direct program impact Walgreens?
A: Walgreens is open to participating and can work within various reimbursement models ( " ). They support programs that increase transparency and lower drug costs for consumers, aiming to collaborate with partners like Lilly ( " ).

Pay-for-Performance Contracts
Q: What's the focus and opportunity in pay-for-performance contracts?
A: Most pay-for-performance contracts are currently in Medicare Part D, with expansion into Medicaid and potentially commercial space ( " ). Walgreens' ability to deliver on these contracts enhances credibility and opens up further opportunities ( " ).

Market Share Opportunities in Cost-Plus Model
Q: Can Walgreens gain market share with the cost-plus model?
A: Walgreens aims to differentiate by leveraging its trusted brand and other assets to gain share ( " ). They can compete on unit price but seek to stand out through services and patient engagement, helping them to gain market share ( " ).