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Walgreen Co. buys stake in drug wholesaler, gains more market clout

March 19, 2013|By David Lazarus
  • Walgreen Co. buys a stake in major drug wholesaler AmerisourceBergen, giving the pharmacy chain more muscle in setting prices.
Walgreen Co. buys a stake in major drug wholesaler AmerisourceBergen,… (Bloomberg )

Walgreen Co. is buying a stake in drug wholesaler AmerisourceBergen, giving the drugstore chain greater clout in negotiating prices with drug makers -- and setting its own prices at the retail level.

Walgreen could end up owning even more of AmerisourceBergen if it exercises an option to buy a related company in 2015.

The wholesaler will supply Walgreen with both brand-name and generic drugs for its more than 8,000 drugstores, as well as its mail order and specialty pharmacy businesses.

Analysts say Walgreen will now have more muscle in haggling prices with generic drug makers. But don't expect this to result in lower prices for consumers. Pharmacies routinely jack up prices for generics to boost profits.

In my latest column, I write about the lack of transparency in prices of generic drugs. I cite the example of a Target customer who saw the price of a generic antibiotic climb from $6 to $133 before being reduced to $8.

With Walgreen now getting deeper into the wholesale game, expect the murky nature of the drug business to become even murkier.

Is the Food and Drug Administration paying attention?

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