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Elevance PBM CarelonRx to buy Kroger specialty pharmacy business

The decision to sell the business comes after a review of assets and is meant to avoid disruptions to patients.

Jeff Lagasse, Editor

Photo: Willie B. Thomas/Getty Images

Grocer The Kroger Co. has entered into a definitive agreement for the sale of its specialty pharmacy business to CarelonRx, a subsidiary of Elevance Health, the companies said this week.

Financial terms of the deal were not disclosed.

Kroger Specialty Pharmacy has been a part of Kroger since 2012. Colleen Lindholz, president of Kroger Health, said the decision to sell the business came after a review of assets, when "it became clear that our strong specialty pharmacy business unit will better meet its full potential outside of our business.

"One of the most important considerations was continued operations to ensure minimal disruption to our associates and patients," she said. "We are confident this transaction will help the business to grow and deliver better results for patients."

WHAT'S THE IMPACT?

The retailer's specialty pharmacy serves patients with chronic illnesses that require complex care. According to Kroger, skilled clinicians and therapy programs allow patients and prescribers to benefit from education and resources, counseling, side-effect management, financial assistance, personalized care and administrative expertise.

The specialty pharmacy business supports patients facing diseases including rheumatoid arthritis, growth hormone deficiencies, multiple sclerosis and bleeding disorders.

Kroger Specialty Pharmacy is separate from other Kroger Family of Pharmacies, including in-store retail pharmacies and The Little Clinics – meaning in-store retail pharmacies and The Little Clinics are not included in the transaction.

This transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the second half this year. It's not expected to have an impact on Kroger's 2024 guidance.

THE LARGER TREND

Kroger made its entrance into value-based care last year, with Kroger Health, the company's healthcare division, partnering with Better Health Group to offer value-based primary care to seniors enrolled in Medicare. The care model will kick off at select Kroger stores in the Atlanta area. The retailer has already begun enrolling seniors and will offer preventive care and personalized attention from a primary care provider.

Also last year, Kroger Health and Select Health announced a co-branding relationship for Medicare Advantage plan offerings. These new co-branded plans will be offered in select counties in four states: Colorado, Idaho, Nevada and Utah. Select said the plan offerings will increase access to options and services that promote health and wellness, and provide customer savings on groceries and prescription medications.

CarelonRx has been busy as well. Last year the Elevance Health PBM launched a new cost-savings program called EnsureRx, which automatically compares prices of select covered generic medications against a variety of cash discount cards and applies the lowest cost for consumers at the pharmacy counter.

Starting this spring, CarelonRx will launch a weight-management program to provide support to members who are on weight-loss journeys – including those who use GLP-1 medications. The digital-first program will provide access to digital coaching and wellness tools meant to help participants manage and monitor their weight goals, with the ability to connect to live human support, both digitally or over the phone.

Elevance took a step into the specialty pharmacy space early last year when it finalized its acquisition of BioPlus, which provides a range of specialty pharmacy services for patients living with complex and chronic conditions, such as cancer, multiple sclerosis, hepatitis C, autoimmune diseases and conditions in rheumatology. Elevance anticipated the acquisition would help it meet the specialty-drug needs of clients and customers with a more whole health-focused approach.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.