Governor Gavin Newsom at 2019 California Democratic Party State Convention at the George R. Moscone Convention Center in San Francisco, June 1, 2019. (Photo: Gage Skidmore)
The Possible Effects Of California ‘No Longer Doing Business With Walgreens’
Walgreens stands to lose millions of customers, California could lose thousands of jobs
By Evan Symon, March 7, 2023 5:21 pm
A day after Governor Gavin Newsom announced that the state will “no longer do business” with the pharmacy chain Walgreens, the Globe looks at what the state could possibly announce and what it could mean for all parties involved.
Following Walgreens decision last week to no longer sell abortion pills in the 20 states where they are illegal at the state level due to a threatened lawsuit, Governor Newsom fired back by tweeting out “California won’t be doing business with Walgreens or any company that cowers to the extremists and puts women’s lives at risk. We’re done.”
California won't be doing business with @walgreens — or any company that cowers to the extremists and puts women's lives at risk.
We're done.https://t.co/OB10cYfm8H
— Gavin Newsom (@GavinNewsom) March 6, 2023
The initial announcement brought confusion for many, as no one was sure what that meant. Newsom’s office attempted to clarify what it meant later that day by adding “California is reviewing all relationships between Walgreens and the state. We will not pursue business with companies that cave to right wing bullies pushing their extremist agenda or companies that put politics above the health of women and girls.”
However, this did little to help, with no follow-up announcements on Tuesday. The few people connected with the situation who did speak, such as California Pharmacists Association president Richard Dang, only said somewhat vague remarks with a hint that Newsom could be going after state insurance plans.
“Walgreens’ business would be severely limited by changes to state insurance plans,” noted Dang.
So what could be coming up? What could it do to Walgreens? And could it do to the average Californian.
“I think we can rule out some scenarios off the bat,” explained Roger Springer, a former executive with two companies that helped negotiate contracts with local and county governments, to the Globe on Tuesday. “California will not order all Walgreens to leave the state. That’s impossible. Nor will he put big restrictions on Walgreens in general to entice people not to shop there. All that can be easily challenged in court anyway. Same with if he tries to ban all insurance in California for accepting Walgreens. Nothing nearly that drastic.”
“Now there has been a lot of talk about people on state plans, and that is the most likely scenario here. Theoretically the largest stoppage he could do is stop all Medi-Cal recipients to buy medication through Walgreens. That’s 13 million people in California. That’s millions of customers lost overnight, and even with only a third of those people getting prescriptions from Walgreens, can cost a lot of money. And remember, not going to the store for medication can change buying habits too, meaning other purchases usually made there will go to places like CVS instead.”
“But that still might be too big, so the safest option would be to just have Walgreens out on state employee insurance plans. There are 212,000 full-time employees in the state under this program, as well as dependents. Then there is another 1.5 million under their retirement insurance insurance program CalPERS. If Walgreens can’t be used in conjunction with these, that is still likely a lot of people lost and a lot of lost revenue.”
“For Walgreens, who hasn’t been shy before about closing poorly performing stores, the sudden loss of a lot of customers could force a bunch to close due to the drop in revenue. So that means not only more lost business, but job loss in California. There are nearly 600 Walgreens stores in the state, and they all account for about 10% of all pharmacy orders in the state. If a bunch of people have to suddenly move their prescriptions out, we’re talking about an overnight shift of several percentage points in state pharmacy orders. A lot of insurance companies have agreements with Walgreens right now, so those could be severed as a result. Big shifts where people buy things don’t just happen that quick.”
“There are a lot of other ways this can go right now too don’t forget. But in terms of likelihood, California stopping state-employee programs seems probable, and you can see the fallout from that if it happens.”
More on what California’s plans for Walgreens are is expected to be announced soon. Walgreens shares on the stock market have been down since Newsom made the announcement on Monday.
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This move is clearly way beyond the authority of the governor’s office. Hairgel is in way above his head.
“We will not pursue business with companies that cave to right wing bullies pushing their extremist agenda or companies that put politics above the health of women and girls.”
But they will pursue business with companies that cave to left wing bullies pushing their extremist agenda or companies that put politics above the health of women and girls.”
Doesn’t Walgreens have a responsibility to comply with each of the states in which it operates. How is requiring a company, that also operates in California, to violate the laws in other states even legal? At least Walgreens losses in CA would be quantifiable, and if Walgreens were able to win a lawsuit against CA, the state would place billions at risk.
Uhhh… every other nation wide pharmacy is following the law, also Gav.
So Guv, why not stop doing business with everyone: RitAid, CVS, and all the grocery and department stores who have pharmacies.
He is getting to be Biden 2.0. How soon before Newsom has his own Corn Pop?
What do you think of old burr heads decision to tell a thriving company to leave.That mindless turd never thinks about anyone else unless they are gay or Mxlotvmf.All cleaver boy is doing is setting himself to step into Biden’s shoes before he is run out of Washington.
Why doesntMr.Hairbrush stop doing work with all the insurance companies that ripe off their customers every day.I just got my next year’s home insurance from Farmers .Last year my bill was $1545.This year it will be $10,000.Now that’s a problem that someone should look into.Over a 500 percent increase and I’ve live in for the past 35 years .They claim it is now in a fire district! It would be difficult for any L.A City fireman to know if any property is in a fire area since they have only 3-4 references in which they mention fire district problems. Im moving to another state.I don’t care where ,I’m leaving Adios!
I think Walgreens will come out ahead..
Add this problem to ongoing thievery and Walgreens might do well to close many or all of its stores in many California cities.
So, Governor Nuthatch is threatening another company. There have been several thousand companies in the last few years close up shop in California. The cost of doing business is not worth it. We hope that more companies vacate the not so golden state. Maybe, if Governor Nuthatch would like to see his cities with no pharmacies, clothing, or grocery stores his Marxist retoric will change. Probably not.! Best way to eliminate a governmental cancer is to radiate it.
Radiate it? I’m pretty sure you mean Eradicate* it but either way you should probably just go back to your day job 🙂
Keep digging that hole, Gov Gruesome.
He was probably triggered by the March for Life event, which occurred in front of the Capitol building in Sacramento that happened on the same day he lashed out with this tweet. If he was even IN his office in the Capitol, which I doubt. If not, maybe he learned about it while he was watching OANN. He seems to be oddly obsessed with so-called “right-wing” media outlets. I guess he “loves to hate” them….. or does he actually secretly love them?
What about the other multi-state pharmacies? Is CA going to boycott them too?
CVS, Rite-Aid, Wal-Mart, are all subject to the same laws as Walgreens, and will likely make the same decision as Walgreens. No modern RX corporation is going to defy the laws of the state and sell medications where it is illegal.
Yeah, no kidding, Jay Herndon. I guess when you’re delusional — as the Gov seems to be — and your arrogance and hair-trigger temper take over, your brain can no longer process the obvious outcome that you rightly point out.
Is noone concerned about continuity of care? What is the outcome of having a person go to Walgreens for their regular refill of an important medication (blood pressure, diabetes, thyroid, etc) to be told that their state employee insurance doesn’t cover it at Walgreens anymore (they were the designated local pharmacy provider for 90 day supply) and they need to switch pharmacies? How much trouble, time, delay, cost does this cause that person? So mostly retired and current state employees have an important member of their healthcare team changed, their refills are delayed, they suffer health consequences (some may even die) and for politics? Clearly, Governor Newsom feels that the publicity is far more important than the health and well being of the State’s current employees and retirees. The chaos this will cause for all healthcare providers (and all the patients they serve) will be memorable…and not in a good way. By the way, perhaps the big beneficiary will be Optum RX (pharmacy benefits administrator and coincidentally, designated mail order pharmacy).
I just finished reading your essay on the probable consequences of California’s decision to break relations with Walgreens, and I must say, you guys nailed it! Your insights on the probable impacts are not only well-researched, but also presented in an appealing manner. It’s as if you simplified a complicated issue for readers like myself.