- A mere three days after Walmart said it would exit CVS' pharmacy benefit network for commercial and Medicaid managed care in a dispute over pricing, the two said they resolved the fight. Terms were not disclosed.
- CVS had accused Walmart of wanting excessive reimbursement that would lead to higher costs for consumers, while Walmart accused CVS' pharmacy benefit manager Caremark of taking excessive profits as a middleman.
- The dispute, if left unresolved, would not have impacted Walmart's participation in CVS' Medicare Part D pharmacy network and Walmart's Sam's Club division in the CVS Caremark pharmacy networks.
The spat between the two retail giants involved less than 5% of CVS' covered lives, but it reflects the larger battle between PBMs and pharmacies over pricing and the role of middlemen. It also comes as CVS slowly gobbles up Aetna, well on its way to solidifying itself as a retail pharmacy-PBM-insurance giant.
PBMs, once an obscure part of the drug pricing chain, have come under pressure in the past year and are continually under fire from the Trump administration and the pharmaceutical industry as well.
The multiyear deal was called "fair and equitable" by a Walmart official, one of the country's biggest retail pharmacy companies with about 4,600 locations. The company has focused on affordable prices for a while now, even providing some generic medications for $4.
While the dispute did not involve the bigger ties between the two companies, it still should settle jittery investors, said Ana Gupte, a Leerink sell-side analyst.
"The stock has come under pressure in the last month and this has been a driver. We also expect that the fears of PBM rebate guarantee on branded price deceleration are overblown," she wrote, noting she is bullish on the stock.
The drugstore operator is reportedly in talks to deepen its partnership with the country's fifth-largest insurer, Humana, in a move experts believe to largely be spurred by the CVS-Aetna megamerger currently caught in a snag. The move would help Walmart drive market share and Humana leverage the recent consumerist push to strengthen both their brands and footprints.
Shares of CVS were up nearly 3% in opening trade, while Walmart shares were relatively flat.