Walmart to leave CVS pharmacy network, roiling drugstores

Walmart will leave CVS Health’s network that administers drug benefits for millions of Americans, in a dispute over costs that could roil the business of filling prescriptions.

Walmart, the world’s largest retail chain, was demanding higher reimbursements for its in-store pharmacies where customers who have CVS pharmacy-benefit management plans could pick up their prescriptions, CVS said in a statement announcing the split.

Walmart said that it was resisting efforts by CVS to steer consumers to certain pharmacies to have their prescriptions filled. The Bentonville, Arkansas, company said in an emailed statement that it was committed to giving customers access to affordable healthcare, “but we don’t want to give that value to the middle man.”

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CVS Health Corp. signage is displayed outside a store in downtown Los Angeles, California, U.S., on Friday, Oct. 27, 2017. Photographer: Christopher Lee/Bloomberg
Christopher Lee/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’ healthcare,” the statement said. “Walmart is standing up to CVS’s behaviors that are putting pressure on pharmacies and disrupting patient care.”

“Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” CVS Caremark President Derica Rice said in the statement. “We simply could not agree to their recent demands for an increase in reimbursement.”

CVS isn’t only one of the U.S.’s biggest pharmacy chains, with almost 10,000 locations. It also oversees drug benefits for about 93 million people, including setting up networks of drugstores where they can pick up their prescriptions.

Walmart is a major pharmacy operator as well, and dispenses drugs in most of its almost 5,000 locations. It has also flirted with getting more involved in the healthcare industry, looking at offering wellness services and other offerings that will become a key part of CVS’s business with its takeover of health insurer Aetna last year.

The split won’t affect Medicare beneficiaries in CVS’s Part D drug plans. It also won’t apply to Walmart’s Sam’s Club stores, CVS said in the statement.

CVS said the move won’t materially impact its 2019 results. News of the split was reported earlier by the Wall Street Journal.

Bloomberg News
Pharmacy benefit management Pharmacy benefits Healthcare plans Healthcare costs Health insurance Walmart CVS
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