The Walgreen Company (Walgreens, or at times archaically Walgreen) is an American company which operates the second-largest chain in the United States of America behind CVS Health. It specialises in filling prescriptions, health and wellness products, health information and photo services. As of February 29, 2016, the company operated 8,177 stores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. It was founded in Chicago, Illinois, in 1901. The Walgreens headquarters office is in the Chicago suburb of Deerfield, Illinois.

In 2014, the company agreed to purchase the remaining 55 percent of Switzerland-based Alliance Boots that it didn't already own to form a global business. Under the terms of the purchase, the two companies merged to form a new holding company, Walgreens Boots Alliance Inc., on December 31, 2014. Walgreens became a subsidiary of the new company, which retains its Deerfield headquarters and trades on the Nasdaq under the symbol .

History

Company history

Walgreens began in 1901, with a drug store on the corner of Bowen Ave and Cottage Grove in Chicago, owned by Galesburg native Charles R. Walgreen, Sr. By 1913, Walgreens had grown to four stores on Chicago's South Side. It opened its fifth in 1915, and four more in 1916. By 1919, there were 20 stores in the chain. As a result of alcohol prohibition, the 1920s was a successful time for Walgreens. Although alcohol was illegal, prescription whiskey was available and sold by Walgreens.

In 1922, the company introduced a malted milkshake, which led to its establishing ice cream manufacturing plants. The next year, Walgreen began opening stores away from residential areas. In the mid-1920s, there were 44 stores with annual sales of $1,200,000. Walgreens had expanded into Minnesota, Missouri, and Wisconsin.

By 1930, it had 397 stores with annual sales of US$4,000,000. This expansion partly was attributed to selling alcohol, mainly whiskey, which Walgreen often stocked under the counter, as accounted in Daniel Okrent's Last Call: The Rise and Fall of Prohibition. The stock market crash in October 1929 and the subsequent Great Depression didn't greatly affect the company. In 1934, Walgreens was operating in 30 states with 601 stores.

After Charles Walgreen, Sr., died in 1939, his son Charles R. Walgreen took over the chain until his retirement. The Charles R. Walgreen years were relatively prosperous, but lacked the massive expansion seen in the early part of the century. Charles "Cork" R. Walgreen III took over after Walgreen Jr.'s retirement in the early 1950s, and modernised the company by switching to barcode scanning. The Walgreen family wasn't involved in senior management of the company for a short time following Walgreen III's retirement. In 1986, it acquired the MediMart chain from Stop & Shop. In 1995, Kevin P. Walgreen was made a vice-president and promoted to Senior Vice President - Store Operations in 2006.

Walgreens logo until 2006.

On July 12, 2006, David Bernauer stepped down as CEO of Walgreens, replaced by company president Jeff Rein. Holding degrees in accounting and pharmacy from the University of Arizona, Rein was a pharmacist, store manager, district manager, and treasurer prior to being named Chief Executive Officer and Chairman of the Board. Greg Wasson, former President of Walgreens Health Services, was named President and Chief Operations Officer.

On October 10, 2008, Rein abruptly quit as CEO, replaced by Alan G. McNally as Chairman and Acting CEO.

On January 26, 2009, Gregory Wasson was named CEO, effective February 1, 2009.

21st century expansion

A neon-lit store on Canal Street in New Orleans
  • February 17, 2010: Walgreens announced plans to acquire New York City-area chain Duane Reade for $1.075 billion, including debt. Walgreens continues to operate in the New York City metropolitan area as Duane Reade; its stores near existing Walgreens were closed.
  • March 24, 2011: Walgreens acquired Drugstore.com for $409 million. Drugstore.com in turn owned Beauty.com. In 2013 Beauty.com was named by Internet Retailer Magazine in its Top 100 online retail sites list.
  • April 30, 2011: Walgreens operated 8,169 stores; it had expanded into Guam and Puerto Rico.
  • August 18, 2011: Walgreens introduced its "Nice!" store brand of food and household products. Fully rolled out in 2012, the Nice! brand replaced a variety of existing Walgreens store brands such as Deerfield Farms, Cafe W and others.
  • June 19, 2012: Walgreens paid $6.7bn for a 45 percent interest in Alliance Boots.
  • July 5, 2012: Walgreens entered into an agreement to acquire Mid-South drug store chain operating under the USA Drug, Super D Drug, May's Drug, Med-X, and Drug Warehouse banners. The deal was expected to be finalised by September 1, 2012.
  • September 10, 2013: Walgreens announced it acquired Kerr Drug.
  • August 6, 2014: Walgreens exercised its option to purchase the remaining 55 percent of Alliance Boots. The combined company is known as the Walgreens Boots Alliance and is headquartered in Chicago.
  • On October 27, 2015, Walgreens announced that it would acquire its rival Rite Aid for $9 per share, a deal valued at $9.4 billion, pending regulatory and shareholder approval. The deal will result in a merger of two of the United States' three largest pharmacy chains. In response to being able to receive approval, Walgreens said that it would be willing to divest up to 1,000 stores to win regulatory approval for its Rite Aid purchase. Walgreens and Rite Aid, combined, own approximately 200 million square feet of retail space in addition to 21 million square feet of office and warehouse space. The two chains operate 12,900 stores in the United States. Walgreens operates 13,100 stores across 11 countries. Walgreens CEO has stated that there's potentially over $1 billion in savings to be reaped from the merger through synergies.
  • July 28, 2016, Walgreens announced it would shut down Drugstore.com, as well as Beauty.com, in order to focus on its own Walgreens.com website.

Walgreens claims credit for the popularisation of the malted milkshake (or at least its version of the malted milkshake), invented by Ivar "Pop" Coulson in 1922, although milkshakes and malted milk had been around for a few time before. This development coincided with the invention of the electric blender in the same year.

In November 2010, Walgreens filed a trademark infringement lawsuit against the Wegmans supermarket chain, claiming the "W" in the Wegman's logo is too similar to Walgreens'. The lawsuit was settled in April 2011, with Wegmans agreeing to discontinue use of its "W" logo by June 2012, although the supermarket retains the right to use the “Wegmans” name in script. According to Jo Natale, Wegmans director of media relations, “The cost of making relatively minor changes to a limited number of products was much less than the cost of litigating this case to the end.”

The logo for the Washington Nationals baseball team is similar to the Walgreens "W"; to date, Walgreens never challenged the Nationals' use of their "W" in a lawsuit.

Corporate operations

Walgreens has its corporate headquarters in Deerfield, Illinois. As of 2009 Walgreens employed 5,200 people at its headquarters.

In 1987 Walgreens employed about 1,100 people at its headquarters, which was at the time in an unincorporated area on the west side of Deerfield. As of 2000, headquarters was still in an unincorporated area in West Deerfield Township.

In the summer of 2014 a corporate relocation to Switzerland was considered as part of a merger with Alliance Boots, a European drugstore chain. This drew controversy as a large number of consumers felt that it was an attempt at tax inversion. On August 5, 2014 Walgreens announced that they wouldn't be relocating their headquarters.

Store model

A Walgreens on Rt.1 South, Saugus, Massachusetts.

Walgreens stores were originally connected to local groceries. In Chicago, their flagship market, they teamed up with either Eagle Food Centers or Dominick's Finer Foods, usually with a "walkthru" to the adjoining store and often sharing personnel. This concept was instated to compete with the popular dual store format used by chief competitor Jewel-Osco/Albertsons-Sav-On. They eventually ended the relationship with Eagle and focused primarily on a connexion to the Dominick's stores. PharmX-Rexall filled the vacated Walgreen locations joined to Eagle stores.

A Walgreens "corner drugstore", located in a Marriott street-level retail space, on the corner of a heavily trafficked intersection in Washington, D.C

In its 2009 business model, Walgreens are freestanding corner stores, with the entrance on the street with the most traffic flow, figuratively making it a "corner drugstore" similar to how a large number of independent pharmacies evolved. Some stores have a drive-through pharmacy.

The store management team usually includes a Store Manager (MGR), an Executive Assistant Manager (EXA), and at least one Assistant Manager (MGT). In 2009, Walgreens introduced the Store Team Lead (STL), or "non-management keyholder", position in a large number of of its stores. In 2012, Walgreens announced that they would be phasing out the MGT, EXA, and STL positions for the Assistant Store Manager Trainee (ASM-T), Assistant Store Manager (ASM), and Shift Leader (SFL) positions, respectively. The new management structure will implement a new structure and payscale that will more closely resemble their competitors to reflect the industry standard.

Disability inclusion initiative

In 2002, Walgreens senior vice president of supply chain and logistics Randy Lewis began a programme aimed at providing opportunity to the disabled to work side by side with typical workers. The result was the development and opening of two distribution centres whose staff is approximately forty percent disabled. The model was so successful that additional companies such as Clarks Companies NA, Glaxo Smith Kline, Best Buy, and Costco have either examined it or placed it under consideration.

Wag's menu logo circa 1985

Walgreens used to own Sanborns, one of the largest pharmacy and department store chains in Mexico. Walgreens purchased Sanborns from Frank Sanborn in 1946 and sold it to Grupo Carso in 1982.

In the 1980s, Walgreens owned and operated a chain of casual family restaurants/pancake houses called Wag's, an attempt to compete with Woolworth's lunch counters. The Wag's restaurants were quite similar in concept to Denny's, IHOP and Golden Bear. At the highpoint, it had over 100 locations. Walgreens sold most of these to Marriott Corp. in 1988 and by 1991 the chain was out of business.

Consumer record

December 2012, A judge ordered Walgreens to pay $16.57 million to settle a lawsuit. The claim was that over 600 stores were illegally dumping hazardous waste and unlawfully disposing of customer records containing confidential medical information.

Prescriptions

A Walgreens in Little Egg Harbor, New Jersey, which opened in 2006.

As of June 2008, Walgreens "agreed to stop altering prescriptions without physician approval as part of a multi-state agreement to settle allegations of improper billing," reported the Knoxville News Sentinel:

Walgreens was accused of switching the dosage forms on three medications commonly prescribed for Medicaid patients without doctor approvals in order to boost profits. This resulted in Medicaid programmes nationwide paying much more for the medications than they normally would have, according to a press release by the [Tennessee] attorney general's office. Walgreen Co. agreed to comply with state and federal laws on the matter, plus pay $35 million to the federal government, 42 states and the Commonwealth of Puerto Rico.

"The compliance agreement will be in effect for five years. Walgreens didn't admit liability, as part of the settlement," reported the Chicago Sun-Times.

The Walgreens web site invited users to write reviews of a few OTC products such as vitamins and nutritionals, but didn't invite users to write reviews of the corresponding Walgreens-branded products. A recent revision of the Walgreens web site has added the ability to review any product it sells.

Allegations of discrimination

In March 2008, Walgreens settled a lawsuit with the Equal Employment Opportunity Commission (EEOC) that alleged the company discriminated against African-Americans for $24 million. The settlement was split between the 10,000 African-American employees of the company. In the agreement, Walgreens avoided any admission of guilt.

The decree, one of the largest monetary settlements in a race case by the EEOC, provides for the payment of over $24 million to a class of thousands of African American workers and orders comprehensive injunctive relief designed to improve the company's promotion and store assignment practices.

In September 2011, Walgreens settled a lawsuit with the Equal Employment Opportunity Commission which claimed that a store improperly terminated a worker with diabetes for eating a package of the store's food while working to stop a hypoglycemia attack.

Medicaid

Also in 2008, Walgreens "agreed to pay $35 million to the U.S., 42 states and Puerto Rico for overcharging state Medicaid programmes by filling prescriptions with more expensive dosage forms of ranitidine, a generic form of Zantac and fluoxetine, which is a generic form of Prozac."

In 2009, Walgreens threatened to leave the Medicaid program, the state and federal partnership to provide health insurance coverage to the poor, in Delaware, over reimbursement rates. Walgreens was the largest pharmacy chain in the state and the only chain to make such a threat. The state of Delaware and Walgreens reached an agreement on payment rates and the crisis was averted.

In 2010, Walgreens stopped accepting Medicaid in Washington state, leaving its one million Medicaid recipients unable to get their prescriptions filled at these 121 stores.

On April 20, 2012. The U.S. [Department of Justice] announced, that Walgreens agreed to pay $7.9 million in settlement. The fine relates to allegations of violations of the federal Anti-Kickback Statute and the False Claims Act regarding beneficiaries of federal health care programs.

Express Scripts

In 2011, Walgreens announced it would end its relationship with Express Scripts, a prescription benefits manager. A coalition of minority groups, led by Al Sharpton's National Action Network, sent letters urging CEO Gregory Wasson to reconsider. Groups sending letters were National Hispanic Christian Leadership Conference, the Congress of Racial Equality, Hispanic Leadership Fund and others. On July 19, 2012, Walgreens and Express Scripts announced a multi-year pharmacy network agreement that includes rates and terms under which Walgreens would participate in the broadest Express Scripts retail pharmacy network available to new and existing clients as of September 15, 2012.

Use of proprietary drugs

Walgreens was named in a lawsuit by the Union Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund in the Northern District Court of Illinois in January 2012. The suit alleges Walgreens and Par Pharmaceuticals violated the Racketeer Influenced and Corrupt Organizations Act "at least two widespread schemes to overcharge" for generic drugs.

The lawsuit alleges drugstore chain Walgreen and generic pharmaceutical maker Par established a partnership in which Par manufactured and/or marketed generic versions of antacid Zantac and antidepressant Prozac in dosage forms that weren't subject to private and governmental reimbursement limitations.

It further said Walgreen purchased those dosage forms from par at a cost substantially higher than the widely prescribed dosage forms, and then "systematically and unlawfully filled its customers' prescriptions with Par's more expensive products, rather than the inexpensive dosage forms that were prescribed by physicians."

Distribution of oxycodone

In September 2012, the U.S. Drug Enforcement Administration (DEA) accused Walgreens of endangering public safety and barred the company from shipping oxycodone and additional controlled drugs from its Jupiter, Florida distribution center. The DEA said that Walgreens failed to maintain proper controls to ensure it didn't dispense drugs to addicts and drug dealers. The DEA additionally said that six of Walgreens' Florida pharmacies ordered in excess of a million oxycodone pills a year. In contrast, in 2011, the average pharmacy in the U.S. ordered 73,000 oxycodone tablets a year according to the DEA. One Walgreens pharmacy located in Fort Myers, Florida, ordered 95,800 pills in 2009, but by 2011 this number had jumped to 2.2 million pills in one year. An Additional example was a Walgreens pharmacy located in Hudson, FL a town of 34,000 people near Clearwater, that purchased 2.2 million pills in 2011, the DEA said. Immediate suspension orders are an action taken when the DEA believes a registrant, such as a pharmacy or a doctor, is "an imminent danger to the public safety." All DEA licensees "have an obligation to ensure that medications are getting into the hands of legitimate patients," said Mark Trouville, former DEA special agent in charge of the Miami Field Division. "When they choose to look the additional way, patients suffer and drug dealers prosper."

The Jupiter, Florida distribution centre which opened in 2001 is one of 12 such distribution centres owned by Walgreens. Since 2009, Walgreens' Jupiter facility has been the single largest distributor of oxycodone in the state of Florida, the DEA said. Over the past three years, its market share has increased, and 52 Walgreens are among the top 100 oxycodone purchasers in the state, the DEA said.

In 2013, United States Attorney Wifredo Ferrer said Walgreens committed "an unprecedented number" of record-keeping and dispensing violations." Walgreens was fined $80 million. At the time, the largest fine in the history of the Controlled Substances Act

Sale of tobacco

In common with additional US pharmacies (a major exception is CVS Pharmacy), Walgreens stocks tobacco products for sale to the public. Some campaigners in the USA advocate the removal of tobacco from pharmacies due to the health risks associated with smoking and the obvious contradiction of selling cigarettes alongside smoking cessation products and asthma medication. Walgreens and additional pharmacies who continue to sell tobacco products have been subject to criticism, and attempts have been made to introduce regional bans on the practice, which has taken place in the City and County of San Francisco.

Walgreens defends its tobacco sales policy by reasoning that through selling tobacco in its outlets, it is more readily able to offer to customers advice and products for quitting smoking.