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The Digital Pharmacy: Walgreens’ Emerging Strategy

by ndrao | January 14, 2015

The Walgreens PR team has been busy of late, announcing a spate ofDIGITAL RX partnerships that aim to transform them from a brick-and-mortar retail pharmacy into a digital one-stop shop for health care consumers. Specifically, three press releases in recent weeks have revealed a strategy that aims to leverage the 82 million “Balance Rewards” members by trading them store loyalty points for using various features from an expanding in-app menu.

First, Walgreens and WebMD have been collaborating for months on a partnership that brings WebMD tools (namely an online goal-setting/care coaching program) to the Walgreens website, and introduces Balance Rewards-based incentives for users of the WebMD app who are tracking fitness, nutrition, or other health data. It also introduces a refill feature to the WebMD app, so that users can order a refill or change pickup location after scanning the bar code on their empty Rx.

Second, Walgreens is working with Qualcomm in a similar fashion to link the usage of a specific set of devices (so far, two blood pressure cuffs and a blood glucose monitor) to members’ Balance Rewards account. This partnership was unveiled at the Health2.0 conference last fall – It will be housed in the Walgreens app at some point in “early 2015.”

Finally, late last year, Walgreens announced they will partner with MDLive, a leading virtual visit supplier, to give patients round-the-clock access to doctors through a smartphone camera-driven visit. This is available to customers in two states today (California and Michigan). Functionality-wise, this represents an expansion of a “pharmacist chat” feature that came out in the Walgreens app last year.

It’s a no-brainer that Walgreens is looking to incent people into coming to their stores. But their strategy to leverage wearables, at-home biometrics, virtual visits, and in-app tools is worth a closer look. The first two announcements above essentially provide people with coupons that they must earn – by monitoring a chronic disease, making progress against a weight loss plan, and so on. The MDLive partnership will likely route any prescriptions through Walgreens pharmacies, while building loyalty to the app and establishing brand credibility in the eyes of the time-pressed, convenience-seeking healthcare consumer.

These deals all appear to be win-wins for the companies involved at first, but real success for the healthcare system will hinge on consumers actually participating. And if we’ve seen one thing in digital health, it’s that if you build it, they’re not guaranteed to come.

More importantly, “success” needs to be defined here. Is more business and brand glad-handing by three publicly traded companies worth celebrating? Measuring outcomes and quantifying the public health impact of an undertaking of this scale will not be easy – nor do any of these three entities really have an obligation or incentive to do so publicly. Will rewards points lure people in to buy discounted soda and candy, or will this function as more of a health savings account (HSA) that only applies to healthcare items in-store?

And speaking of HSA, how will other stakeholders such as employer groups and payers get involved – is there a bigger role that WebMD can/will bring to the table? Walgreens embarked upon a handful of ACO partnerships in the last 18 months – will they be able to use these new mobile tools to add in a new layer of data about consumer preferences and behaviors (and take advantage of a new set of between-visit reimbursements by CMS)? Is there a strategic role for their partnership with Theranos in all of this? Will their partnership with Qualcomm just be another corporate co-branding PR play, as it appears to be today, or will they take a more device-agnostic approach moving forward that really enables their pharmacists to monitor populations, regardless of which device a patient is using?

All in all, while these partnerships need to play out and mature over the next couple of years, Walgreens is taking a bold, app-first step into the age of the digital pharmacy. This comes at an interesting time for the company, as they recently completed their acquisition of Alliance Boots, the European pharmaceutical wholesaler. As a result, Walgreens faces some questions about leadership of the new global corporation, and is in earnest cost-cutting mode. It remains to be seen if these recent announcements are aimed solely at ensuring their investors of a long-term strategy during this merger process. Perhaps their shift to digital-first entry points is aimed at reducing in-store overhead and improving overall operational efficiency for the long-term.

Either way, our take is that Walgreens has obtained a diverse set of pieces to enable them for long term success – but it remains up to them to execute. It’s too early to predict what will happen, but if these pieces align properly, Walgreens will be able to take advantage of the emerging age of the new healthcare consumer, for whom convenience, access, and cost are dominant drivers of utilization and spending.

One thing is for sure – their main competitor, CVS, is taking a no-holds barred approach to the same opportunity – albeit with a slightly different strategy involving deeper clinical services, delivery system partnerships, and of course more investments in their digital presence. For CAS subscribers, this month’s domain monitor explores this emerging consumer trend through a deeper dive on two key forces shaping the new landscape: virtual care and retail care, including a deeper look at what the other 900-lb gorilla of pharmacies, CVS Health, has got planned for the next few years.

2 responses to “The Digital Pharmacy: Walgreens’ Emerging Strategy”

  1. […] market. Walgreens had much bigger presence this year than in years past, from their keynote to the ongoing digital partnerships they’ve been announcing. Big Pharmacies could emerge as a provider-neutral, payer-neutral, and […]

  2. […] has arrived, and patients can now ping a doctor to see them in less than 3 minutes, or go to their local pharmacy or standalone urgent care […]

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