The Top 15 U.S. Pharmacies of 2017: Market Shares and Key Developments For The Biggest Companies

Next week, Drug Channels Institute will release our 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. It’s the ninth edition of our popular examination of the U.S. pharmacy distribution and reimbursement system.

The exhibit below—one of 160 in our new report—provides a first look at the 15 largest pharmacies, ranked by total U.S. prescription dispensing revenues for calendar year 2017. I also highlight crucial market changes that affected our ranking. As you will see, the big got bigger in 2017.

For a sneak peek at the complete report, download the free overview. If you would like to preorder by corporate purchase order or check, please email Tamra Feldman. Enjoy!

MEET THE GIANTS

The table below shows the largest pharmacies ranked by total prescription dispensing revenues. The top tier of dispensing pharmacies—CVS Health, Walgreens Boots Alliance (WBA), Express Scripts, OptumRx (UnitedHealth), Walmart, and Rite Aid—accounted for nearly two-thirds of U.S. prescription dispensing revenues in 2017. The top 15 pharmacies accounted for about three-quarters of total U.S. dispensing revenues from retail, mail, long-term care, and specialty pharmacies.

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Here are some of the notable developments behind the figures above:

• Many of the largest pharmacies are now central-fill mail and specialty pharmacies operated by such PBMs as Express Scripts, Caremark, and UnitedHealth Group’s OptumRx. This reflects the growing role of specialty drugs in the pharmacy industry. We estimate that specialty drugs accounted for one-third of the pharmacy industry’s revenues in 2017.
  
  While the specialty boom continues to drive the industry’s revenue growth, the specialty market in 2017 showed signs of a slowdown. (Note that specialty drugs’ share of plan sponsor pharmacy benefit costs is higher than their share of prescription revenues.) 

• Amid the ongoing growth in specialty revenues, dispensing revenues from traditional (non-specialty) drugs declined in 2017. Retail pharmacies that focus on traditional drugs account for a majority of the industry’s dispensed prescriptions but a decreasing share of the industry’s revenues.

• CVS Health’s retail and long-term care business declined in 2017, due largely to the company’s non-participation as a preferred pharmacy in many plans. For 2018, these trends will likely reverse, because CVS has altered its strategy and is now aiming to become a preferred pharmacy in payer networks. See New Part D Data: CVS Wins Big in 2018's Preferred Pharmacy Networks.

• Walgreens Boots Alliance’s (WBA) U.S. prescription revenues grew in 2017. Its same-store prescription growth was much higher than its peers’ growth. This reflects its aggressive participation in commercial and Medicare Part D narrow networks. Three notable transactions boosted Walgreens’ pharmacy revenues in 2017 and will also affect 2018 figures: its acquisition of Rite Aid stores, the formation of AllianceRx Walgreens Prime, and its minority investment in PharMerica.

• In 2017, Rite Aid began transferring stores to WBA, so its revenues declined. We project that once the asset sales are complete, Rite Aid’s annual prescription dispensing revenues (including EnvisionRx’s Orchard Pharmaceutical Services) will be about $11 billion. Yesterday, Albertsons announced its merger with Rite Aid. If the transaction receives regulatory approval, the combined company would have had 2017 pro forma prescription dispensing revenues of $16 billion and more than 4,300 pharmacies.

• Kroger has been an active acquirer of competing supermarket chains and specialty pharmacies. Consequently, it’s the country’s second-largest supermarket and seventh-largest pharmacy.

In our 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, we analyze these and other developments about pharmacy dispensing channels, third-party payers, pharmacy benefit managers (PBMs), patients’ financial contributions, and drug wholesalers. Look for it on February 27!

NOTES FOR NERDS

There are at least three reasons our estimated prescription revenue data may not correspond with those from other public sources:

• We have computed or estimated the figures on a calendar-year basis. The fiscal years for many public retail companies do not correspond to the calendar year.

• Many companies do not report prescription revenues. We have therefore used various methods and sources to estimate the data.

• As noted in the footnotes, we have made various adjustments to account for the pro forma impact of mergers and acquisitions.

Full details next week.