Walmart is leaving CVS Caremark, CVS Health's pharmacy network, some time in the next couple of months. The two companies are citing a falling out over pricing, with CVS maintaining it couldn't agree to Walmart's recent demand for an increase in reimbursement rates.
Walmart, one of the nation's largest retail pharmacy players, is opting to leave the commercial and managed Medicaid retail pharmacy networks.
The break up announced early Tuesday will not, however, impact Walmart's participation in CVS' Medicare Part D pharmacy network and Walmart's Sam's Club division remains in the CVS Caremark pharmacy networks.
As always, the clash between the two major healthcare players leaves patients bearing the brunt of the fire. Tuesday morning's news will affect consumers whose employers get drug benefits from CVS and Medicaid enrollees with CVS coverage.
"Despite market focus on reducing health care costs, Walmart requested reimbursement increases that would ultimately result in higher costs for clients and consumers," CVS alleged in a press release.
A Walmart spokesperson fired back, saying the company is "committed to providing value to our customers across our business, including our pharmacy, but we don't want to give that value to the middle man. 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."
Though CVS requested Walmart continue to fill prescriptions as an in-network pharmacy through April 30, it's under no contractual obligation to do so. The withdrawal could come as early as February if talks fall through, according to sources who spoke to The Wall Street Journal. "We continue to work with Walmart to align on that timing," CVS said.
Fewer than 5% of CVS Caremark members exclusively use Walmart pharmacies, according to CVS, and the average distance a member would need to travel to reach an in-network pharmacy remains virtually unchanged (with or without Walmart).
However, members who will be affected by the move will be notified and provided information about alternative in-network pharmacies near them, CVS said.
Walmart is one of the country's biggest retail pharmacy companies with about 4,600 locations and has focused on affordable prices for a while now, even providing some generic medications for just $4.
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 down roughly half a point in premarket trading, but the healthcare conglomerate says the issue won't materially impact its financial performance. Walmart's stock was largely unaffected.