The CVS Caremark Corporation has announced that it will no longer allow Walgreens' participation in its retail pharmacy networks.
CVS officials say the company "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," but no agreement has been reached.
Walgreens also is barred from participating in CVS Carmark's Medicare Part D retail pharmacy networks, effective Jan. 1, 2011. According to CVS Caremark officials, Walgreens' most recent actions violated the terms of its existing agreements and Walgreens officials have failed to respond to efforts by CVS Caremark to continue business negotiations.
CVS Caremark has been negotiating with Walgreens over the past several months, seeking an agreement that company officials say 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, the company has continued to seek higher reimbursement rates and announced on June 7 that it would not participate in CVS Caremark PBM networks going forward for members covered under new or renewal plans.
"We are disappointed but not surprised that CVS Caremark has taken this action," said Kermit R. Crawford, Walgreens' executive vice president of pharmacy. "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."
Per Lofberg, president of CVS Caremark's pharmacy benefit management business, said Walgreens has used this approach in the past, targeting employers, health insurers, government entities and other plan sponsors, in order to raise the pharmacy reimbursement rates it receives from CVS Caremark.
"We believe this approach is totally contrary to the needs of our clients who are all struggling to keep pharmacy healthcare affordable in today's challenging environment," he said.
"We regret any inconvenience this change may have on plan members who currently fill their prescriptions at Walgreens but are confident that through our remaining valued network partners, we will continue to provide excellent geographic coverage for our clients and their members across the country," said Tom Ryan, chairman and CEO of CVS Caremark. "We will continue to provide convenient and affordable pharmacy care to members, and we are committed to a smooth transition of affected members to other pharmacy providers in our networks."
"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," said Crawford.
Walgreens officials said "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 (the) 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."