Walgreens Pulls Support From CVS Caremark PBM

DEERFIELD, Ill. — In a letter sent Monday, Walgreens here told its rival CVS Caremark, Woonsocket, R.I., that it would no longer participate as a provider in new and renewed prescription drug plans awarded after June 7 to CVS Caremark’s pharmacy benefit manager.

Reasons cited for the withdrawal in participation were:

• Plan designs that require patients with chronic conditions to use CVS pharmacies or Caremark mail service for their prescriptions rather than Walgreens or others.

• Lack of information over CVS drug plans that are transferred within the CVS Caremark pharmacy network or acquired as a new prescription drug plan from a client.

• Unpredictability of CVS Caremark reimbursement rates that don’t reflect the market.

Walgreens said it gets 7% of its annual sales from Caremark plans, which was about $4.5 billion in fiscal 2009.

CVS Caremark was quick to send a response, saying it was surprised and disappointed by Walgreens’ decision. The drug retailer countered Walgreens’ charge of below-market reimbursement rates.

“Walgreens is offered comparable reimbursement rates as other large national retail chains, including CVS/pharmacy,” the company said in a press statement. CVS then charged Walgreens with being a “high-cost pharmacy provider” who seeks to raise reimbursement rates at the expense of plan sponsors and members while CVS seeks to reduce costs and improve health care outcomes for its clients.

Joe Harmison, an Arlington, Texas, pharmacy owner and National Community Pharmacists Association president, issued a statement in support what he called “Walgreens’ momentous decision.”

He said the move “is an indictment of all that has gone wrong for patients and the practice of pharmacy since the CVS Caremark merger in 2007. The company's pre-merger promises to be agnostic as to where patients filled their prescriptions have given way to strong-arm tactics to steer patients to CVS Caremark retail or mail-order pharmacies. As Walgreens said, CVS Caremark programs like the misnamed 'Maintenance Choice' separate patients from their longtime local pharmacists, forcing some to a distant CVS or to mail order against their will.”

Harmison noted that the Federal Trade Commission is looking into allegations of anti-competitive and anti-privacy business practices. More than two dozen state and local governments are also scrutinizing CVS Caremark, he said.

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