John Driscoll: I think you nailed it, Tim. I think the only thing I’d add is we’re not just growing with payors. We’re growing beyond Blue’s plans, with other payors. And it — and what Shields does an exceptionally good job and in a growing market is leveraging a clinical pharmacy model, which delivers more adherence and better outcomes. And so it’s really a great example, very — where there’s a lot of detail involved of we’re being paid for performance, and that’s growing in terms of building on Walgreens franchise with large hospital systems and small hospital systems around America. But it’s based on execution, which I think there’s still a lot of runway both from a payor and from a health system perspective, and obviously, the underlying especially drug market that is only going to get larger and more complicated, which I think plays to the Shields and the Walgreens strengths.
Charles Rhyee: Great. And if I could just follow up on George’s question. Tim, you kind of said that you probably are looking to invest in more care delivery assets kind of like VillageMD, but could we expect more type of partnerships with entities like Pearl as a way to kind of expand continued access to care?
Tim Wentworth: Yes is the short answer. We recognize that VillageMD represents, and City, represent a fabulous sandbox for us to build services, test them, and by the way, demonstrate that they perform and help them achieve their objectives, while at the same time putting us in a position of growing. And from our perspective, that is a starting point to being a partner of choice for any number of — as you know, Village has certain geographies they’re very deep in, but there are geographies they’re not in at all. And there are large provider opportunities for us to partner in similar ways in those marketplaces to grow our business and, importantly, help them grow theirs.
Operator: Your next question comes from the line of Eric Percher from Nephron Research. Please go ahead. Your line is open.
Eric Percher: Thank you. On pharmacy, we’ve been hearing from Walgreens and the pharmacy services are the key to driving better reimbursement for several years. And it looks like we’re seeing that in vaccines today, the broader reimbursement pressure continues. And you have a peer saying that you’ve hit a floor on unit cost offsets. Independents are saying the same and it can’t go lower. Do you share the view that we’ve hit a floor or that reimbursement pressure has reached a level you can’t go past in ’24 or ’25? And perhaps more important, given your PBM experience, does Walgreens have the leverage needed to drive more fair reimbursement or new models?
Tim Wentworth: So listen, in my 25 years at PBM, the floor just kept moving lower, not just for retailers, but frankly, for all the players in the system, right, whether that be rebates or acquisition costs, et cetera. And so we don’t accept that — we think that there is very little left, let’s put it that way, in the tank. In terms of if I’m a PBM and I’m trying to deliver value to my marketplace, the levers that I have include retail network design. And what I — my point would be is squeezing the retailer beyond sort of where it’s economically sensible for the retailer, by itself, there isn’t much left there. And so to do that doesn’t produce enough value for the PBM to go win on that basis. It’s way, way more effective to win on creation of more certainty around value beyond unit costs.
So I think we’re close — I’m not going to say we’re close to the floor, but we are in this — and we’ve had a very successful 2024 negotiations with the various PBMs and are 95% along the way of being done for ’24 and have some good indications for ’25. And again, we are — we believe we can help drive a transition in the marketplace over time to a more value-based model, which will frankly show well to — through to the end users and the patients. And so from my standpoint, I’ll never declare there’s a floor. And as I’ve said to our team, guess what, we still have to compete. We don’t get to not compete just because the reimbursement model changes. We will compete, though, on things that we’re actually very good at and that we can control.
And I think that as I look forward in the next three or four years, we can play a leadership role in that in a way that helps PBMs win. Let me be clear. Our job is to help PBMs win. I want more prescriptions coming through our stores, and that does not happen simply by being a great patient experience. It happens by being a great payor partner. And that’s the place that we’re going to be focused. And we are listening carefully and trying to understand what are the payors trying to do in order to, therefore, configure the places we create value. And as you’ve seen, two very large PBMs have said at least — and I think they’re responding, it’s really interesting to me, to more pull from the marketplace than we may have experienced historically as it relates to either pass-through or transparent models, and therefore, announcing these programs that they’re putting out in the marketplace that we can play very, very effectively in.
