Walmart, CVS split over prescription drug price battle

Walmart and CVS Health will no longer be in the same network for filling prescription drugs after the two companies couldn’t come to a drug pricing agreement.

Walmart, the largest retailer in the world, opted to leave CVS Health’s pharmacy benefit manager (PBM) network, CVS Caremark, though CVS has asked Walmart to continue filling prescriptions as in-network at participating pharmacies through April 30, 2019. CVS is awaiting Walmart’s response, the company said.

According to CVS, Walmart was asking for higher payments from CVS for its pharmacies.

“At a time when everyone is working hard to find ways to reduce healthcare costs, Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” Derica Rice, president of CVS Caremark, said in a statement. “While we have enjoyed a long relationship with Walmart as a low-cost provider in our broad national networks, based on our commitment to helping our clients and consumers manage rising pharmacy costs, we simply could not agree to their recent demands for an increase in reimbursement.”

CVS Health, which is currently in the final stages of closing a $69 billion acquisition of health insurer Aetna, is one of the nation’s largest PBMs, with more than 93 million customers in the prescriptions drug plans it covers. Walmart reached a new, three-year agreement with PBM Express Scripts in mid-December. 

Less than 5 percent of affected CVS Caremark members use Walmart exclusively to fill their prescriptions, according to CVS Health, and more than 63,000 other pharmacies remain in CVS Caremark’s national pharmacy network. CVS Health has more than 9,800 locations. Walmart dispenses drugs in about 4,700 locations.

“The network continues to exceed industry benchmarks with regards to network pharmacy access by a significant margin without Walmart,” CVS said in a statement.

The disagreement between the two giant companies highlights another brewing issue for PBMs, which have been criticized for their opaque business practices as the middlemen in the pharmacy space. Rebate concerns also were a main sticking point for industry associations that objected to the merger between CVS Health and Aetna late last year.

In the disagreement, Walmart warded off efforts from CVS to steer customers to certain pharmacies, according to Bloomberg.

“This issue underscores the problems that can arise when a PBM can exert their unregulated power to direct members on where to fill their scripts, disrupting patients’ health care,” a statement to Bloomberg said. “Walmart is standing up to CVS’s behaviors that are putting pressure on pharmacies and disrupting patient care."

Walmart has signaled it has other interests in the healthcare space, including a rumored purchase of Humana and the hiring of healthcare executives to lead its health and wellness division. 

In early December, CVS announced a new PBM pricing model that would pass through 100 percent of rebates to plan sponsors, the company said. The model, which began in 2019, intended to guarantee net cost predictability and simplify pricing.

CVS Health also stated it will work with Walmart to potentially reach a new agreement.

“We also remain open to continuing timely good faith negotiations with Walmart in the hopes of reaching an agreement to provide quality pharmacy care at a reasonable cost,” Rice said.

Amy Baxter

Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."

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