CVS Health Settles Prices fights with Walmart



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CVS Health
Corp.

CVS 3.39%

Y

Walmart
Inc.

WMT 1.02%

They resolved their struggle for the cost of supplying recipes, avoiding a threatened division between the health giant and the retail giant.

CVS had said Monday that Walmart was expected to leave the pharmacy networks of its pharmaceutical benefits manager, CVS Caremark. The change would have affected people whose employers have drug benefits administered by CVS Caremark, as well as Medicaid enrollees with CVS drug coverage. His plans would have stopped paying the prescriptions filled at Walmart, one of the largest retail pharmacy retailers in the country.

Instead, the two companies said on Friday they had reached a new agreement to keep Walmart in CVS Caremark's networks. The companies did not disclose the terms of their agreement, but said it covered several years.

Derica Rice, president of CVS Caremark, said in a press release that PBM was pleased to have developed a solution with Walmart and that the agreement reached its priority to help "customers and consumers reduce their pharmacy costs."

Sean Slovenski, Walmart's senior vice president of health and wellness, called the terms of the agreement "fair and equitable" and in the best interest of the customers. "We are pleased that our CVS Caremark customers can continue to save money and live better," he said in a press release.

The companies' dispute focused on prices, an area where PBMs such as CVS Caremark are under scrutiny amid concerns about the rising cost of drugs and the opaque pharmaceutical pricing methodology.

Pharmacy benefits administrators manage drug coverage for employers, health insurers and others. They negotiate with the manufacturers of medicines and pharmacies the prices that must be paid for the recipes and say that they obtain better offers for their clients.

CVS Caremark said Monday that Walmart had demanded an increase in payment for prescriptions. The PBM reimburses pharmacies when buyers with CVS Caremark prescriptions purchase drugs.

But a person familiar with the Walmart position had said that the retailer did not ask CVS to increase the amount it pays when buyers fill a prescription. Walmart asked CVS to maintain rates at current levels, said this person.

Last week, Walmart sent a letter of termination to CVS, according to people with knowledge of the matter. But even in the midst of their hostile public stance, both companies showed interest in resolving the conflict.

Another battle between PBM and a pharmaceutical company developed very differently in 2012. In that case, millions of Express Scripts Holding Co. customers had to change prescriptions to different pharmacies because

Walgreen
Co.

removed from the PBM network. The shock took seven months to resolve.

Write to Anna Wilde Mathews at [email protected] and Sarah Nbadauer at [email protected]

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