CVS Health Corp. announced Tuesday (Jan. 15) that Walmart is exiting its prescription network over pricing disputes. Walmart confirmed the discussions over price continue with CVS Caremark, which manages the company’s pharmacy benefits.
In response to Walmart’s stand against pricing strategies that benefit a middleman and not consumers, the Arkansas Pharmacists Association said patients with CVS-administered drug benefits (including Arkansas Blue Cross Blue Shield) may not be able to have prescriptions filled at Walmart stores if the retail giant does leave the network.
“It’s no surprise to Arkansas pharmacists how PBMs (prescription benefit managers) operate, but last year patients got their first look behind the curtain of the pharmacy benefits management industry when many of them weren’t able to use their pharmacist of choice because PBMs weren’t paying a fair price,” Arkansas Pharmacists Association COO John Vinson said. “Now, the world’s largest retailer is leaving the CVS network because of the challenges that Arkansas pharmacies have been facing for years.”
CVS said Sam’s Club would remain within its pharmacy networks, even if Walmart does pull out effective April 30.
Vinson said Medicaid enrollees with the CVS drug coverage in Arkansas also would no longer have Walmart as an option for filling prescriptions if the retailer leaves the network. CVS said the ongoing dispute would not impact Walmart’s presence in its Medicare Part D pharmacy network. That represents a large percentage of CVS scripts according to Cowen & Co. analyst Charles Rhyee.
Walmart said the company remains committed to providing value to its customers across the business, including in the pharmacy. Through that mission, the retailer continues to look for ways to streamline costs including those paid to middlemen.
CVS released the following statement regarding the Walmart dispute:
“At a time when everyone is working hard to find ways to reduce healthcare costs, Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” said Derica Rice, president of CVS Caremark.
Vinson said since 2018, Arkansas pharmacists have been on their own battling CVS Caremark and other PBMs when they slashed reimbursement prices pharmacists receive for filling a prescription.
“In many cases, CVS/Caremark was reimbursing independent pharmacists at a rate lower than the pharmacy paid to purchase the medication, while paying their own CVS pharmacies at rates much higher, keeping the money in their own pockets,” Vinson said. “In addition, CVS and other large pharmacy benefit managers routinely use anti-competitive tactics to steer patients to themselves — their PBM owned mail order and PBM owned retail pharmacies — disrupting the patient’s control over their own healthcare and creating a “heads, we win/tails, you lose” approach to patients and benefit design.”
He said after months of lower reimbursements, some pharmacies around the state were on the verge of shutting down. He said that prompted Gov. Asa Hutchinson to call a special legislative session in 2018 to sign emergency legislation requiring PBMs operating within the state to be licensed and submit to regulation by the state’s insurance department.
Vinson said PBMs were an unregulated industry prior to the emergency legislation. The state issued the first licenses to PBMs in January to CVS Caremark and Aetna, which acquired by CVS last year for $69 billion.
PBMs have been in the spotlight since July 2018 when the President Donald Trump’s administration proposed a rule to scale back protection that allow rebates between drug manufacturers, insurers and PBMs. There has been no update on the rule since mid-2018.
Vinson said the Wall Street Journal has reported PBMs overcharged taxpayers roughly $9.1 billion through Medicare Part D reimbursements. He said the time for transparency has come at the national level following the example set by Arkansas last year requiring PBMs to be regulated and monitored with respect to reimbursements paid to pharmacists.
Analysts who follow this issue agree further tension is likely among various players with larger companies exerting pressure on competitors.
CVS said less than 5% of the affected Caremark members use Walmart exclusively to fill their prescriptions. CVS is the largest pharmacy in the country with 23.8% of the prescription drug market, according to Statista. Walmart has a 5% market share.