Walgreen worries about public option…
With the news yesterday that some form of the public option for healthcare appears to be moving forward, we can probably expect more companies to start including warnings like Walgreen (WAG) did in the 10-K it filed yesterday:
The Federal government has been considering proposals to reform the U.S. health care system. These proposals may increase government involvement in health care, increase regulation of pharmacy services, result in changes to pharmacy reimbursement rates, and otherwise change the way we do business. The effect of these proposals could have an impact on our results of operations.
The risk factor is a new one for Walgreen, but they’re hardly the only company starting to publicly fret. Just this morning, Centene (CNC) issued a similar warning in their 10-Q. Indeed, we count over 30 companies that have issued similar warnings so far this October, compared with fewer than 10 in October 2008.
Now Walgreen’s warning is particularly interesting because in the 10-K, they note that prescriptions account for 65% of their sales and that 95% of those were reimbursed by third parties. So we decided to also take a look at campaign contributions being made by Walgreen employees — mostly executives — and it’s pretty clear that a number of the key Senators and Congressmen/women in the healthcare debate are recipients. This data is actually donations made by Walgreen Co PAC, which is where the majority of company employees who contribute to campaigns seem to be sending their money.
Now maybe we’re just being overly sensitive to this issue lately since last week, I had to pick up a prescription from Walgreen competitor CVS (CVS) and shelled out $91 for something I’ve bought in the past overseas for under $10. But the state of healthcare in this country is strangling both small businesses like footnoted — and many large businesses too that can’t afford to provide their employees with adequate healthcare coverage.
So here’s hoping something actually gets done this time in Washington and many more companies than the 30-odd we’ve found so far start issuing similar warnings.
|
Posted in Tags: 10Ks, politics, retailers, soapbox |
 10 Comments » |
RSS
October 27th, 2009 at 10:45 am
WashPost has story today of how much AARP rakes in from royalties & fees.
As to CVS rip, no wonder Canada pharmas online do such heavy business. Maybe
time to invest in bio & pharma stocks even in face of D.C. issues? Has the decline
in those passed yet as it did after Clinton years banged them over same issues?
AARP: Reform advocate and insurance salesman
Seniors group makes millions from royalties on health plans
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/26/AR2009102603392.html?wpisrc=newsletter
October 27th, 2009 at 10:32 pm
Frank-
At least AARP tells both sides of the healthcare debate.
Yes. AARP charges fees. And charges for advertising. So ?
I am disturbed Walgreens seems to be implying that a person should fear Insurance companies being accountable. What’s wrong with accountability ?
October 28th, 2009 at 5:58 am
Good article.
Yes Walgreens and CVS both, all their Executives know exactly who to donate to in Washington and who is running to get re-elected.
These Executives know exactly who the players are in the Senate and Congress that will take money and vote anyway they want for campaign cash.
It is called legal Bribery.
However I saw a article on TV last year while in Kansas City.
The TV station investigated these and other Pharmacies all over the city.
What they found out is nothing more than price fixing and Gouging.
They found out that the Pharmacies allover gouge up to 3000% markup on perscriptions over what they pay for it.
So they pay 5.00 for a bottle of pills and mark it up 3000% and that is why it costs so much for 6 pills or a 30 day supply of amoxicillin.
CVS and Walgreens are doing the same.
If they were selling gas at these rates.
We would be paying 150.00 a gallon
The time for reform is now and it is way overdue to shutting this ripoff and Fraud down once and for all.
October 28th, 2009 at 11:16 am
Conspiracy theories aside, if you knew anything about 10(k) filing requirements you would know that it’s a requirement for any publicly traded company to report even the most remote possibility for business impact. A company could be sued for not reporting the least possible scenario in a 10(k) filing. These things have and always will read like the worrying mom who can’t shake the idea that she left the iron on at home before starting a trip.
Just google “10K Doom and Gloom” and you’ll see how common it is for successful, everyday, companies to use this form to bemoan the woes of their business if such-and-such condition came to occur.
October 28th, 2009 at 11:31 am
@Patrick: welcome to footnoted. If you had taken a few minutes to look around before tapping out insults on your keyboard, you might realize that we know quite a bit about 10K filings since SEC filings are the key focus on this site. We don’t need to Google “10K Doom and Gloom” because we actually read the filings — every day! But thanks for stopping by
October 28th, 2009 at 3:39 pm
Truth is – the profit margins that pharmacy’s make on prescription medicine sales are real low. This is why the big chains offer so much other retail products in their stores. And this is why traditional mom and pop pharmacy’s aren’t more successful – because they don’t offer all the other retail products that a CVS/Walgreens offer.
October 28th, 2009 at 3:54 pm
Goodbye Walgreen , Hello Target!! They have cool colored bottles!!!
October 29th, 2009 at 9:52 am
It’s about time…they should worry…haha. I had a prescription for a liquid stool softener for my elderly DOG. Their charge for 6 oz. was $17.50. When I had to get a larger size, the price was the same. I asked the pharmacist why. She told me “the company has a minimum price allowed” for that item (maybe others, I don’t know). What a despicable company mandate and practice. Walgreen’s for your health….NOT.
October 31st, 2009 at 1:20 pm
Unfortunately, the majority of people do not understand the business model for pharmacy. Reimburemsent rates for prescriptions are actually really low. The fact is when it comes to many state Medicaid plans, pharmacies actually lose money when they fill the prescription. There is a minimum cost to the pharmacy to fill any prescription – medication, insurance billing (they charge the pharmacy money every time a claim is submitted), labor, paper, vials, ink.. etc… As one person already posted, insurance companies have minimized their reimbursement rates, and this is why mom and pop pharmacies have been disappearing. They cannot stay in business. While I am in favor of healthcare reform, government controlled reimbursement rates can potentially do the same thing to retail pharmacies. Folks, the people who make money on these drugs are the manufacturers. Your pharmacist is actually your most acessible healthcare professional, and they often provide medical advice at no charge. If government starts over-regulating, those 2 aspects of pharmacy may soon have to change. This is one reason why the number of family medicine physicians are decreasing. It is not profitable for them to be a doctor unless they specialize- insurance reimbursement is not high for general medicine. So now, if you need a general check up, you may have to now start seeing a nurse practitioner. In many cases, that may be all you need, but it is definitely not the same as seeing a physician. One last point- be weary of online “canada” pharmacies. They can often actually be located in China, and be providing counterfeit medications.
March 22nd, 2010 at 3:47 am
Another aspect of pharmacy that the consumer fails to see is the insane amount of money poured into the development of the drug. Drugs like Plavix take billions of dollars to develop, that means the drug company needs to make billions of dollars in order to begin to profit. That’s why medication prices are so high. Nobody is getting gorged. People are spending billions of dollars and years of research so that we can improve our healthcare and quality of life so those people should be reimbursed significantly, because if they weren’t there would be no point in continuing to do that, and essentially that means everyone just dies sooner.