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Walgreens to tackle health-care costs with Alphabet’s Verily

Walgreens Boots Alliance is teaming with Verily, Alphabet’s life sciences unit, on improving outcomes for patients with chronic conditions, the companies announced.

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The partnership would increase access to Verily’s technology by deploying them at Walgreens’ pharmacies. A big focus for the companies will be medication adherence, which costs the U.S. health care system some $100 billion to $289 billion a year. Much of this cost is due to increased hospitalizations for patients who get sick when they don’t take their medication as prescribed.

Walgreens CEO Stefano Pessina said the company is committed to finding more affordable solutions for patients and that forging the right partnerships is part of that effort.

“The continued rise in chronic diseases today can be costly to patients as well as to our healthcare system,” Pessina said in a statement. “Working with Verily, we’ll look at how we can best support integrated and value-based care to meet our patients’ needs, as well as opportunities to address other chronic conditions over time.”

Verily CEO Andrew Conrad said that working with Walgreens provides the health tech company “the opportunity to jointly tackle real-world issues that significantly impact the health of individuals and communities.”

Both Walgreens and competitor CVS Health have mentioned lowering health-care costs for consumers as a priority in recent announcements. While competitor CVS Health pursued this goal through its blockbuster acquisition of insurer Aetna, Walgreens has sought to transform itself through a series of partnerships with companies like insurer Humana and diagnostics company LabCorp.

Similarly, it is the latest signal from Verily’s parent company Alphabet that it intends to ramp up in the health-care space.

In November, Alphabet’s Google hired hospital executive David Feinberg to run its new health division, which is focused on bringing its medical AI research into clinical practice. Verily will not serve under Feinberg, but the two groups are closely aligned. For instance, Verily’s CTO Linus Upson is currently the interim CEO of that division, but will be replaced by Feinberg when he joins early next year.

The Walgreens collaboration is the unit’s first known partnership in the pharmacy space.

The companies said that Onduo, Verily’s diabetes company, will work together on a virtual solution for Walgreens employees and their family members. This will be available to those who have been diagnosed with type 2 diabetes. The details on this program are still vague, but the companies said they’d be part of a broader alliance between Verily and Walgreens.

Onduo was created by Verily and pharmaceutical giant Sanofi to roll out what it refers to on its website as a “virtual diabetes clinic.” It offers supplies and coaching to people with diabetes to help them manage their condition.

Verily, which was initially known as Google Life Sciences, works closely with health care companies from Johnson & Johnson to Sanofi on joint ventures ranging in scope from next-generation glucose monitors to surgical robots.