Walmart And CVS Caremark Walk Back Pending Pharmacy Split

• CVS officials said the company’s pharmacy benefit management division and Walmart were splitting over a price dispute Tuesday.
• The organizations walked back the announcement Friday.
• The split would have meant that many people who have CVS Health drug plans would no longer be able to pick up their prescriptions at Walmart locations.

Walmart and CVS Health’s pharmacy benefit management (PBM) division said Friday they will continue to partner after resolving a pricing dispute that led CVS to announce they were splitting Tuesday.

The split would have meant that many people who have CVS Health drug plans will no longer be able to pick up their prescriptions at Walmart locations.

News of the reconciliation between Walmart and CVS Caremark, the company’s PBM division, will be a relief especially for rural patients.

“Walmart is in a lot of rural areas where there aren’t a lot of choices,” health care entrepreneur Dave Chase told The Daily Caller News Foundation Tuesday. He called a potential Walmart-CVS Caremark split “troublesome for patients.”

During the dispute, Walmart maintained that CVS was trying to control where customers filled their prescriptions, according to Bloomberg. Walmart has an “unassailable” reputation for making drugs affordable, including its $4 generic prescription drug program, Chase told TheDCNF.

But CVS maintained that Walmart, which has leverage as one of the biggest pharmacy operators in the U.S., was pressing for higher reimbursements from CVS Caremark, its PBM subsidiary. CVS twisted Walmart’s arm with a relatively out-of-the-blue announcement of a pending split.

“Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” CVS Caremark President Derica Rice said in a statement Tuesday. “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 Caremark doesn’t just account for a portion of CVS revenue. It makes up most of its revenue, according to Bloomberg. More than 93 million Americans have CVS-administered prescription drug plans. The CVS-Walmart split would not have affected Medicare Part D beneficiaries or customers picking up prescriptions at Sam’s Clubs, according to the CVS statement.

PBMs like CVS Caremark often receive a bad rap because of their lack of transparency. Healthcare Finance News explains PBMs this way:

Pharmacy benefit managers are uniquely an American concept, acting as third-party administrators of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, and state government employee plans.

PBMs are often blamed for high drug prices. New Senate Finance Committee Chair Chuck Grassley revealed his three-part initial plan to cut drug prices Wednesday. His plan did not include rethinking legislation surrounding PBMs, but he has discussed the need for oversight of them.

“I’ll also continue diligently pursuing oversight of both the public and private sectors of health care, including addressing health care consolidation and anticompetitive concerns, from supply chain middlemen to pharmacy benefit managers (PBMs) to hospitals and health insurers,” the Iowa Republican said in a Jan. 9 statement.

Chase warned against using PBMs as a scapegoat for high drug prices.

“The gains are endless in the PBM arena. There are some good ones,” he told TheDCNF. “The nonprofit I run, we have folks we advise on how to do benefits right, and there are some great PBMs that are transparent and don’t have lots of hidden fees and clawbacks.”

CVS was in the news for its health care business decisions back in 2018. CVS Health finalized a $69 billion acquisition of health insurance company Aetna Nov. 28.

Chase is the co-founder of alternative health care organization Health Rosetta that connects business with health plan benefits consultants it certifies. He is also the author of the “CEO’s Guide to Restoring the American Dream” and “The Opioid Crisis Wake-up Call.”