INDUSTRY NEWS: Walgreens Bails on CVS-Caremark Deal

Since CVS and Caremark merged, Walgreens has steadily felt their interests have been ignored. This abrupt termination is a statement of just how displeased Walgreens feels over the matter.

Wallgreens and Caremark Relationship Goes Sour

Wallgreens terminated provider relationship with CVC Caremark's PBM Business

DEERFIELD, Ill. (Jun. 7) One of the nation's largest drug store chains said it will cease any future pharmacy network plans with another chain's pharmacy benefit management business.

In a letter to CVS Caremark, Walgreens declared it no longer would participate as a provider in any prescription drug plans -- either new or renewed -- awarded after Monday to CVS Caremark's PBM. Walgreens said its decision was based on several factors the company believes “no longer makes good business sense... to be part of their network for new and renewed plans.”

Walgreens made the following declarations in its letter to CVS' PBM business:

• CVS Caremark’s promotion of such prescription drug plan designs as Maintenance Choice disrupts networks by requiring patients with chronic conditions in many plans to use CVS pharmacies or Caremark mail service facilities for their prescriptions instead of Walgreens. This limits patient choice and ends up separating patients from community pharmacists they know and trust at a Walgreens drug store;
• Currently, Walgreens receives no or little information when a CVS Caremark prescription drug plan is transferred to a different and differently priced CVS Caremark pharmacy network, or when CVS Caremark acquires a new prescription drug plan as a client. Because of this, it is difficult to assess and decide in advance whether Walgreens should participate in new or altered CVS Caremark prescription drug plans;
• The growing unpredictability of CVS Caremark reimbursement rates to Walgreens, and the fact that CVS Caremark’s payments for certain drugs often don’t reflect the market, has made it unacceptably difficult for Walgreens to reasonably and economically plan for and operate its business.

“In the three years since the CVS-Caremark merger, it has become increasingly clear to us that Caremark’s approach to Walgreens as a community pharmacy within CVS Caremark’s retail network has fundamentally changed, and we are no longer viewed as a valued community pharmacy within its PBM network,” said Kermit Crawford, Walgreens EVP pharmacy. “In that time, we have come to feel that CVS Caremark’s pharmacy benefit management practices are inconsistent with the value we provide as the largest pharmacy provider in its network and the services we deliver to patients, employers and payers. These services include our trusted pharmacists and clinicians who stand ready to deliver critical healthcare advice, convenient locations with drive-thru pharmacies and 24-hour pharmacies that provide access to emergency medications. Consequently, we have reached a point where participation in future CVS Caremark plans no longer makes sense for us.”

In response to what was called a surprising and disappointing announcement, CVS Caremark issued its own statement on the matter, calling Walgreens' announcement “nothing more than a transparent effort to raise its reimbursement rates at the expense of plan sponsors and members and illustrates an inability to adapt to the demands of the marketplace in today's challenging and rapidly evolving healthcare environment.”

Although CVS Caremark said Walgreens “continues to take steps that make it a high-cost pharmacy provider and disrupt members,” the company remains open to discussions regarding the chain's “continued participation [in our PBM pharmacy networks].”

Meanwhile, the announcement had drawn response from industry groups. The National Community Pharmacists Association said the “unprecedented action” showed that “the concerns expressed by Walgreens echo and further validate the concerns expressed by independent community pharmacists and their patients.”

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