What CVS' exit from clinical trials means for other retail players

Pharmacies and retailers have jumped into the clinical trials space in the past two years as they see big opportunities to grow their businesses in healthcare.

CVS Health took the lead in 2021 when it unveiled its Clinical Trial Services in a bid to drive greater participation in clinical trials. Walgreens, Walmart and Kroger have all followed suit with their own community-based trial businesses. 

But just last month, CVS said it would sunset its research recruitment efforts. A company spokesperson said the healthcare giant routinely reviews its portfolio to ensure its assets are "aligned with our long-term strategic priorities." The company will wind down Clinical Trial Services in "a phased way" and expects a full exit by Dec. 31, 2024.

At the same time, the retail pharmacy giant is betting big on primary care and is focused on bringing two key acquisitions into the fold: Signify Health ($8 billion) and Oak Street Health ($10.6 billion). The company said on its earnings call back in early Mary that those two companies are critical in its aspirations in the primary care space.

With those deals, CVS is now a big player in at-home and clinic-based delivery of at-risk primary and chronic care for Medicare and dually eligible Medicaid patients. The healthcare giant has set out an ambitious growth strategy. Oak Street Health specializes in treating Medicare Advantage patients and has operates 169 senior-focused medical centers across 21 states. CVS want to grow its network of clinics to over 300 centers by 2026.

During the company's first-quarter earnings call in early May, CVS Health CEO Karen Lynch also said the company expects double-digit Medicare Advantage growth in 2023.

The pharmacy giant likely needed to reframe its priorities as it integrates those businesses and moves forward on its strategy, noted Michael Abrams, co-founder and managing partner of consulting firm Numerof & Associates.

"CVS needs to fuel growth from those primary care assets and looking for that growth from the clinical trials business would probably not be a great bet," Abrams said.

The company lowered its profit outlook for the year, reflecting costs from those M&A deals, according to its first-quarter earnings report. The healthcare giant's quarterly revenue was up 11% to reach $85.3 billion but profits were down. CVS posted $2.1 billion in profit in the first quarter, down from $2.4 billion a year ago.

CVS also is bracing for a hit of up to $1 billion as a result of a huge decline in its Medicare Advantage star ratings. For 2023, 21% of Aetna's Medicare Advantage members were enrolled in plans with four stars or higher, down from 87% in the 2022 plan year, according to a filing with the Securities and Exchange Commission. 

"The company is under financial pressure to generate margins from the assets that they just bought, which still need to be integrated into the larger corporation, and the clinical trials business is less attractive in light of current economic concerns," Abrams said.

Disrupting the clinical trial model 

CVS' exit opens up opportunities for other retail and pharmacy players as these companies leverage their community reach and geographic footprint to help recruit patients for research.

The clinical trial landscape is shifting, with a strong push toward driving more diversity in the pool of trial participants. Retail pharmacies are well positioned to play a major role in this shift, both from a geographic and community-trust standpoint, but they will need to add new capabilities to make the most of this opportunity, wrote Nick Davies, Ph.D., Ernst & Young U.S. principal, in a recent EY analysis.

EY interviewed senior executives of R&D organizations about partnering with retail pharmacies. "There is a great opportunity for retail pharmacies to expand the current clinical trial system, which could alter the roles of current players such as contract research organizations (CROs) that work with pharma trial sponsors," Davies wrote. 

Pharmacies can support clinical trials by leveraging patient and customer relationships to increase education and awareness of trials, using their convenient locations to make clinical trials accessible for more and diverse patients, aggregating patient data and managing supply chain logistics, Davies noted.

Retailers also can potentially help life sciences companies cut trial recruitment costs and improve equity and presentation in clinical research. Just 3% of the nation’s physicians and patients take part in clinical trial research that leads to new therapies, according to Food and Drug Administration (FDA) data. Nearly 80% of clinical trials fail to meet enrollment timelines, often contributing to costly delays. These delays can cost sponsors between $600,000 and $8 million for each day that a trial delays a product’s development and launch.

Walgreens has made the most headway in its clinical trial efforts. The retail pharmacy giant has publicly disclosed six contracts for its year-old clinical trials business unit. It just inked a deal with biotech startup Freenome to advance clinical trials of its blood-based tests for the early detection of cancer. Back in April, Walgreens notched a major partnership with Prothena to identify and recruit patients for the biotech company's Alzheimer’s disease drug candidate. 

Walgreens has touted its community reach as a key attribute to increase patient enrollment as well as racial and ethnic diversity in sponsor-led drug development research. The company operates about 9,000 drugstores with a presence in all 50 states, nearly half of which are in socially vulnerable areas, according to the company. More than 75% of Americans live within five miles of a Walgreens.

Earlier this year, Kroger Health, a unit of the grocery chain Kroger Co., kicked off the opening of its clinical trial network by starting recruitment of patients for the group’s first trial for colorectal cancer gut and immune health observations, Fierce Biotech's Joseph Keenan reported.

Walmart also has ambitions in the space. In 2022, it launched a new healthcare research organization with the goal of driving higher-quality, more equitable healthcare.

With CVS bowing out, it creates an opening for other new players. And, these retailers' nationwide geographic reach can be beneficial to clinical research, noted Liz Beatty, co-founder and chief strategy officer at Inato, a company building the world’s first clinical trial marketplace. 

"We know that only 5% of clinical trial sites end up conducting approximately 70% of all clinical trials, and most of them are at well-known, large academic medical centers that are in large urban areas. This can be prohibitive for involving smaller communities, which often can better provide access to minority populations that are underrepresented in clinical research," she said in an interview. "The opportunity and potential impact for CVS and other retailers was great for reaching these underserved populations, because there often is a CVS, Walgreens and others in nearly every community."

With CVS exiting the market, it only reinforces that research sponsors must double their efforts to include community-based providers who are more closely connected to the populations they serve, she noted.

"While having the remaining retailers who are engaging in the clinical trial arena is a good thing overall, they often aren't best positioned to do certain types of research surrounding more complex medical conditions and don't always have deep connections to clinical trial participants' providers," Beatty said.

As Walmart, Walgreens and Kroger pursue their own care delivery strategies, it stands to reason that clinical trial sponsors may be cautious about entering partnerships with these companies, noted Sari Kaganoff, general manager of consulting at Rock Health Advisory, and Chris Lew, also a consultant with Rock Health, in a recent report. For example, Walgreens' recent hefty investments—$5.2 billion in VillageMD, which, in turn, bought Summit Health-CityMD for $9 billion—signals it has ambitious plans in other sectors of healthcare.

But, there are benefits to working with a retailer that could outweigh potential risks for sponsors, Kagaonoff and Lew noted. Retailers' wide geographic footprint could help with studies expected to face challenges in recruiting representative cohorts and thus at risk for failing to meet the study’s diversity action plan, a new FDA legal requirement. 

For studies prone to high attrition, due to frequent follow-ups, a retail delivery model can significantly improve convenience and likelihood of follow-through, they noted. Studies focused on rare diseases also could benefit from this model.

"Instead of viewing CVS’ exit from the trials space as a bellwether of tribulations for other retailers, sponsors should identify which trials in their pipelines align well with retailers’ core competencies, e.g., scale, community relationships, convenience, and focus near-term collaborations there," Kaganoff wrote.

Staying the course requires big investments

If retailers want to have a significant and sustained impact in the clinical research space, they will have to invest in new capabilities and staff training.

According to EY's survey of R&D executives, retail pharmacies will need to develop additional product storage, take steps to ensure good clinical practice compliance for their specific policies and procedures and upskill their current staff to provide quality training and qualifications, Davies wrote. Retailers also need to develop or purchase the appropriate technology to capture and safely store sensitive patient data. "Leveraging all these capabilities needs to be considered early in the design of trials for both sponsors and contract research organizations," he wrote.

Retailers also are facing some headwinds in the market, according to Abrams. Biotech and life sciences companies continue to shed staff as investment in new drugs and research dries up amid rising interest rates. The industry also is contending with the Inflation Reduction Act, a new federal law allowing Medicare to negotiate some drug prices.

Drug manufacturers are reassessing their drug pipelines and eliminating drug candidates with risk profiles or profit potential that no longer makes them viable in a business environment with significantly reduced margin expectations," Abrams said. "With smaller pipelines and smaller R&D budgets, based on lower profit expectations, the demand for clinical trials services can be expected to shrink."

It remains to be seen how CVS’ exit will impact other retailers’ clinical trial pipelines but it's likely there will continue to be strategy shifts in the market, Rock Health's Kaganoff noted.

Whether retailers stay the course, Beatty stressed that the clinical research community needs to stay focused on increasing diversity in clinical trials.

The pandemic put clinical trials and the lack of diversity center stage. It's imperative that we continue that momentum, because health equity "cannot just be a buzzword," she said.

She added, "While there is still so much work to be done, we have seen concerted efforts by life science companies and clinical research organizations to bring more trials to more communities across the globe. Whether that's engaging Indigenous populations for a vaccine trial or studying new cancer treatments for Black communities, it's the local providers that are closer to those patient populations that offer the greatest opportunity to engage a minority participant pool."