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At a certain point we lose the benefits of scale because we are harmed by the loss of competition.
I think we are there. This should be blocked. I will admit its borderline....but I think we lose more then we gain. And its at that point that it becomes too monopolistic.
I know I live in a metropolitan area but there are at least a half dozen pharmacies within two miles of me.
Competitors have been merging and acquiring since forever, here, there, everywhere.
Well let's look at it differently. Main Street (and mall street and strip mall street) only like to lease to big national chains.
Let's pretend you have a Rite Aid across the street from Walgreens. Which is pretty close to the situation in San Francisco's downtown. So Walgreens-Aid will like close one of those stores. And then you have a huge empty store. With one less possible chain to fill it. And there is also a CVS on the same or next block, so there really is no choice.
A lot of places have both RiteAid and Walgreens in their markets. Many close together. So we are going to have a lot of empty storefronts. And not many potential tenants.
At a certain point we lose the benefits of scale because we are harmed by the loss of competition.
I think we are there. This should be blocked. I will admit its borderline....but I think we lose more then we gain. And its at that point that it becomes too monopolistic.
I go to a small "natural" pharmacy chain. I found that for some of my prescriptions the prices were cheaper. The others the price difference was just 10-25 cents so it was fine to go to this more expensive store. And with it I am trading to get a cleaner store that offers tea and chair massage services on the weekends. They even do events like makeovers and facials.
It is a bit further away, but right next to trader joes and my favorite deli so it is worth it for me to go in my book. We pretty much only have CVS and Walgreens. CVS bought out all of our local pharmacy chains.
We do have a RiteAid downtown. Walgreens is across the street and a newly renovated store. So I guess this is going to leave my city with a huge vacancy in prime real estate, in a section of downtown that hasn't done great with retail. And one less 7 day a week business.
The prices at RiteAid are very high. I can go across to the street to the local supermarket and buy the same pharmaceutical products for much less. They also have a pharmacy to get prescriptions filled.
What one has to look at who owns via contract the generic drug distributors and what that then does to the wholesale price of drugs, who gets preferred pricing and what that does to independent pharmacies. One also has to understand that if a couple of large chains control the nations distributors, they then set their own prices and can/do fleece the public.
Walgreens/Amerisource Bergen, CVS/Cardinal, WalMart/Mckesson. Those three wholesalers control a HUGE part of the drug market so basically they control it.
Yep, just realizing economies of scale. Since there is still plenty of competition it may bring prices down a bit.
Or not.
So much depends on an insurer's muscle in a local market.
Health insurer's have been contracting via mergers/ acquisistions for more than 25 years and exiting or cherry picking the Individual Plan Markets.
The Big 5 for profit, publicly traded health insurers intend to become the Big 3 via mergers/ acquisistions. DoJ has sued to prevent these mergers. Some view this as evidence of how big, bad federal government imposes itself into the free market and picks winners and losers.
If this transaction gives you heartburn, then the 2007 acquisition of Eckerd's by CVS would have been like being on the receiving end of a flamethrower enema for you. Didn't you find that acquisition to be a problem also?
Eckerds was at one time owned by JC Penny's. It sold 1200 stores to CVS in 2004 and stores were rebranded. It sold the rest to a Canadian company who subsequently sold to and rebranded as Rite Aid in 2007.
Rite Aid has been closing unprofitable stores in some markets and selling their script business to Walgreens, for years.
Walgreens made an offer to buy Rite- Aid last year and Rite- Aid accepted the offer, subject to shareholder and DoJ approval.
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