CVS and Walmart resolve impasse in the pharmacy contract



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(Reuters) – Walmart Inc (WMT.N), the world's largest retailer, will remain a part of CVS Health Corp (CVS.N) Network for commercial pharmacy and Medicaid customers, the companies said on Friday, breaking a contract impbade revealed earlier this week.

FILE PHOTO: An employee pushes shopping carts outside a Walmart store in Chicago, Illinois, USA. UU., November 20, 2018. REUTERS / Kamil Krzaczynski / Stock Photo

The companies did not provide the financial terms of the new contract.

On Tuesday, CVS said the companies had not reached an agreement on prices and that Walmart was leaving the pharmacy network for prescription drug plans that CVS manages for companies and health insurers and for the state Medicaid program. for people with low incomes.

Walmart and CVS also said on Tuesday they were still in discussions.

CVS shares gained 1.6 percent to $ 64.76 in pre-market trading, recovering some of the stock losses on Tuesday.

"We consider the agreement positively for CVS," Cantor Fitzgerald badyst Steven Halper said in a research note, explaining that the loss of Walmart's pharmacies could have adversely affected CVS's ability to enroll customers in its plans. of prescription drugs for 2020.

Evercore ISI badyst Ross Muken said the speed at which the dispute was resolved probably points to the bargaining power of pharmaceutical benefits managers in contract discussions. Consumers historically move to where their insurance is accepted, and it is likely that Walmart has lost the 15 to 20 million prescriptions it receives from CVS customers, Muken said.

In 2012, Walgreens Boots Alliance (WBA.O) and the pharmacy benefits manager Express Scripts, now part of Cigna Corp (CI.N), did not reach the terms of the contract. Walgreens sales fell when it stopped supplying recipes for Express Scripts customers, and the two companies reached a new agreement mid-year that put Walgreens back in their network.

In addition to its retail pharmacies and stores, CVS is one of the largest pharmacy benefit managers in the country and, after purchasing Aetna, one of its leading health insurance companies. Their prescription plans for those in the Medicare program administered by the government were not affected by the contract dispute, as were their agreements with Sam & # 39; s Club.

Sean Slovenski, Walmart's senior vice president, described the terms as "fair and equitable" in a press release.

Report by Caroline Humer in New York and Ankur Banerjee in Bengaluru; Edited by Chizu Nomiyama and Paul Simao

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