Walgreens invests deeper in hospital specialty pharmacies

The big picture: Many drugs are now classified as "specialty" medications — everything from drugs that need to be administered with a needle to pills that treat cancer and HIV.

• Pharmacy benefit managers own a majority of the specialty pharmacy market, but hospitals have increasingly started in-house specialty pharmacies to get a piece of the pie, according to the Drug Channels Institute.

Between the lines: The operators of specialty pharmacies are often able to steer patients toward their drugs.

• PBMs that own specialty pharmacies automatically make their pharmacies the preferred, cheaper option for patients, which means the PBMs retain more money instead of paying it to other pharmacies.
• Hospitals that own specialty pharmacies have doctors, who could encourage patients to get their meds from the hospital's pharmacy, which consequently makes it more difficult for PBMs to exclude those pharmacies from insurance networks.

How it works for Walgreens and Shields: Hospitals hire Shields to set up the pharmacies, and Shields takes up to 30% of the revenue as its fee, according to the Boston Globe.

What to watch: Walgreens could acquire the remainder of Shields for an estimated $1.25 billion, according to a financial filing.