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Walmart, CVS Health Agree on PBM Pharmacy Network Rates

Walmart and CVS Health have agreed on terms that would ensure continued access to PBM pharmacy services for consumers.

PBM pharmacy services, Walmart, CVS

Source: Thinkstock

By Jennifer Bresnick

- Walmart and CVS Health have signed a multi-year agreement to keep Walmart participating in the CVS Caremark pharmacy benefit management (PBM) commercial and Managed Medicaid pharmacy networks.

Walmart will continue to offer services to Medicare Part D beneficiaries, as well.  These services are contracted under a separate agreement that was not part of this dispute.

While the companies are not disclosing the financial terms of the agreement, both organizations expressed satisfaction with the resolution to an ongoing dispute about pricing. 

“We are very pleased to have reached a mutually agreeable solution with Walmart. As a PBM, our top priority is to help our clients and consumers lower their pharmacy costs,” said Derica Rice, President of CVS Caremark, the PBM business of CVS Health.

“This new agreement accomplishes our top priority and enables Walmart to continue participating in CVS Caremark's commercial and Managed Medicaid pharmacy networks and provides enhanced network stability for our clients and their members.”

Sean Slovenski, Senior Vice President of Walmart Health and Wellness, echoed the sentiments.

“We are pleased to have reached fair and equitable terms with CVS Caremark that are in the best interest of our customers, and we are glad our CVS Caremark customers will be able to continue saving money and living better,” said Slovenski. “We believe in putting our customers first by providing value and keeping our everyday low-price promise.”  

The two companies are both fighting for market share in a highly competitive retail health and pharmacy environment. 

The tussle began after Walmart demanded a higher share of reimbursement for prescription drugs it dispenses, and CVS refused.

The companies went as far as announcing that they would be parting ways on January 14, although they had planned to continue filling prescriptions until April 30, 2019.

“At a time when everyone is working hard to find ways to reduce health care costs, Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” said Rice at the time.

“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.”

Neither company expected significant disruptions from the split.  Less than five percent of CVS Caremark customers affected by the announcement fill their prescriptions exclusively at Walmart locations, CVS said.

Over the following days, however, the two companies continued to hash out their differences and ultimately came to a resolution. 

As a result, CVS Caremark customers will retain access to nearly 68,000 participating pharmacies across the network, including Walmart pharmacy locations.

“As a PBM, CVS Caremark works hard to bring down the cost of drugs for clients and members through the implementation of highly effective clinical programs, innovative purchasing and formulary design and enhanced data analytics,” the companies stated in a press release.

“Walmart is committed to providing affordable healthcare through innovative programs like its $4 generic drug price program that lowered the cost of healthcare for millions of Americans. Walmart also gives communities across the nation access to convenient, quality healthcare by offering clinical services such as low-cost immunizations and medication counseling by Walmart Pharmacists, who are there to assist customers on their healthcare journey.”

The tiff reflects larger forces at work in the retail pharmacy and PBM markets.  Increasing consolidation and new partnerships between large organizations are creating fewer and more powerful entities. 

Observers remain concerned over how mergers and acquisitions in the space, such as the CVS-Aetna deal and the acquisition of Express Scripts by Cigna, will affect consumer choice and prescription pricing.

Maintaining access to pharmacy services at an affordable cost, especially for low-income individuals and seniors, is a high priority for the industry as federal efforts combine with consumer-driven pressures to lower spending on prescription drugs.

Settling the dispute between these two companies is a positive step towards ensuring broad access and choice for consumers in the nation’s most popular insurance categories.

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