Walmart said on Tuesday that it would no longer honor the medication coverage on doctor's prescription from CVS Health, as a result of which large numbers of Walmart customers are looking for a new pharmacist and are strengthening concerns about the increasing market power of the CFS empire.
Walmart confirmed his departure from the CVS Health pharmacy insurance program, called CVS Caremark, after CVS rejected the retail giant's demand for larger fees for the prescribed drugs it distributes.
The switch will affect Walmart customers with CVS Caremark coverage for pharmacies through employer-sponsored insurance and government-funded Medicaid care plans. It does not affect Medicare beneficiaries. It also has no effect on the pharmacies in the Sam & # 39; s Club stores.
Walmart and CVS did not give an estimate on Tuesday of the number of people that will be affected.
The dispute highlights recent mergers in the pharmacy supply chain, which could ultimately limit the choices for the consumer.
Walgreens has formed alliances with Humana and various Blue Cross Blue Shield plans. Amazon is meanwhile busy with the purchase of the previous year from the recipe retailer PillPack.
The fight with Walmart comes at a sensitive time for CVS Health, which is critically reviewed during his recent merger with Aetna, a big health insurance company. The Ministry of Justice has allowed the merger with Aetna.
CVS Caremark was created when CVS bought Caremark Rx in 2007. It is what is known in industry as a "pharmacy benefit manager", or PBM, that offers medication coverage on doctor's prescription and negotiates reimbursement prices for sellers.
PBMs have come under fire in Washington and in state capitals for their role in influencing who wins and who loses in the pharmaceutical supply chain. In some cases they are accused of contributing to rising costs instead of keeping them under control.
Rival pharmacies, particularly small independent pharmacies that are squeezed, suspect that CVS Caremark plays favorites at affiliated CVS pharmacies. Walmart essentially in essence accused CVS Health of having used its influence to bully customers.
"This issue underlines the problems that can occur when a PBM can use its unregulated power to train members where they can fill their scripts, thereby disrupting patient health care," Walmart said in a statement. "Walmart meets the behavior of CVS that exerts pressure on pharmacies and disrupts patient care."
CVS said that Walmart's demand for larger fees would lead to higher costs.
"As everyone works hard to find ways to reduce healthcare costs, the rates demanded by Walmart would ultimately result in higher costs for our customers and consumers," said CVS in a statement. "The decision to leave the CVS Caremark commercial and Managed Medicaid retail pharmacy networks was Walmart & # 39; s and Walmart & # 39; s alone. & # 39; & # 39;
CVS is the number 1 pharmacy vendor in the country, with 9,800 stores, compared to Walmart 4,500, who rank it fourth. With the loss of Walmart's operations, CVS says that people covered by pharmacy insurance will still have 63,000 pharmacies across the country from which they can choose, including CVS and others.
"There's a big clash of titans here," says Francis B. Palumbo, executive director of the School of Pharmacy's Center on Drugs and Public Policy at the University of Maryland.
The lack of information about insurances makes it difficult to judge whether Walmart's move was justified, he said.
"The only thing I can do is ask questions," Palumbo said. "Does Walmart just want to make CVS powerful because Walmart has so many stores?"
On the other hand, he said: "We have Caremark, a huge PPE that owns a chain pharmacy and Aetna, and it seems to me that they have so much market power in so many ways that they can afford to undermine others." 39; & # 39;
Independent pharmacists say that they are struggling from the sidelines.
At Glen Echo Pharmacy in Bethesda, Md., Co-owner Ron Sinker said CVS Caremark has reduced its fee from a margin of 60 percent on a low-cost prescription to 10 or 20 percent. He said that CVS Caremark employer group plans do not allow him to complete a 90-day prescription.
At West Seventh Pharmacy in St. Paul, Minn., Owner Jeff Johnson said he works with other independent pharmacists in a group purchasing organization to use wholesale discounts. With a CVS and a Walgreens a mile away, Johnson said, he is focused on serving a small neighborhood of St. Paul near the Mississippi River.
He is not worried about Amazon's entry into the company.
"Walgreens and CVS will have to compete with Amazon," he said. "I'm not even in that boat."