CVS Caremark Corporation announced June 9 that, while it has worked diligently to come to terms with Walgreens on an agreement that would allow Walgreens to continue as a member of the CVS Caremark PBM pharmacy network, it has no choice but to terminate Walgreens' participation in its retail pharmacy networks effective 30 days from today, or as otherwise may be required by applicable law or contract requirements. In addition, CVS Caremark will terminate Walgreens' participation in its Medicare Part D retail pharmacy networks effective Jan. 1, 2011. CVS Caremark said that Walgreens' most recent actions have violated the terms of its existing agreements and that Walgreens has failed to respond to efforts by CVS Caremark to continue business negotiations.
CVS Caremark has been negotiating with Walgreens over the past several months with the objective of reaching an agreement that would appropriately balance providing consumer access and managing pharmacy costs for CVS Caremark's PBM clients and their members. While Walgreens already receives comparable reimbursement rates to those of other large national retail chains, including CVS/pharmacy, Walgreens has continued to seek higher reimbursement rates and announced on June 7, 2010 that it would not participate in CVS Caremark PBM networks going forward for members covered under new or renewal plans. In order to minimize patient disruption and provide network stability, CVS Caremark's agreements with Walgreens and other retail pharmacies do not permit network participation on a selective basis.
Per Lofberg, president of CVS Caremark's pharmacy benefit management business, said, "Walgreens' announcement was nothing more than a transparent attempt to try to raise the pharmacy reimbursement rates it receives from CVS Caremark. We've seen Walgreens use this approach in the past, targeting employers, health insurers, government entities, and other plan sponsors. We believe this approach is totally contrary to the needs of our clients who are all struggling to keep pharmacy health care affordable in today's challenging environment."
Kermit Crawford, executive vice president of pharmacy for Walgreens, said the company is disappointed but not surprised by CVS Caremark's. “In making our decision not to participate in any new and renewed plans by CVS Caremark, we sought to minimize any disruption to existing relationships between pharmacists and patients,” said Crawford. “CVS Caremark’s move plainly contradicts its own statement on June 7 that their mission is to provide broad access and choice for consumers. Their patent disregard for patient choice and broad access reflected in today’s decision reinforces our conviction that it would not have been in the best interests of our patients, pharmacists, or shareholders to grow our business with CVS Caremark. Regardless of CVS Caremark’s decision, we are confident of our ability to continue to grow our business as a provider in hundreds of other pharmacy benefit networks and as a direct provider to employers.”