“This issueunderscores the problems that can arise when a PBM can exert theirunregulated power to direct members on where to fill their scripts,disrupting patients' health care,” Walmart said in a statement.(Photo: Shutterstock)

Walmart Inc. pharmacies will no longer be partof the networks where most consumers with CVS Health Corp. drugplans can pick up their prescriptions, after a dispute between thetwo giant companies over pricing.

CVS is one of the largest administrators of prescription-drug plans inthe U.S., covering more than 93 million people. While known mostlyfor its drugstores, CVS's pharmacy-benefits managementdivision, CVS Caremark, has come to account for most of itsrevenue. It administers drug coverage for many large employers aswell as numerous Medicare and Medicaid beneficiaries.

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Walmart, the world's largest retailer, is also one of thelargest pharmacy operators in the U.S. The company was demandinghigher reimbursements from CVS for its pharmacies, CVS said in astatement announcing the split.

Walmart indicated it was resisting efforts by CVS to steerconsumers to certain pharmacies to have their prescriptions filled.A company spokeswoman said in an emailed statement that theretailer was committed to giving customers access to affordablehealth care, “but we don't want to give that value to the middleman.”

“This issue underscores the problems that can arise when a PBMcan exert their unregulated power to direct members on where tofill their scripts, disrupting patients' health care,” thestatement said. “Walmart is standing up to CVS's behaviors that areputting pressure on pharmacies and disrupting patient care.”

Amid a larger debate in the U.S. over drug prices,pharmacy-benefit managers like CVS have come in for criticism fromconsumers, lawmakers and regulators for a lack of transparencyabout prices and rebates they negotiate with drugmakers, as well ashow the construct their formularies, or lists of coveredmedicines.

CVS said the rates Walmart was seeking would have led topatients paying more for their medicines.

“Walmart's requested rates would ultimately result in highercosts for our clients and consumers,” CVS Caremark President DericaRice said in the statement. “We simply could not agree to theirrecent demands for an increase in reimbursement.”

CVS shares were down 2.8 percent at 9:40 a.m. in New York.Shares of the company, which is merging with health insurer AetnaInc., have declined about 24 percent since hitting a 52-week highin January 2018.

CVS is one of the U.S.'s biggest pharmacy chains, with almost10,000 locations. Walmart dispenses drugs in about 4,700 locations,and has flirted with getting more involved in the health-careindustry. It has looked at offering wellness services and otherofferings that will become a key part of CVS's business with itstakeover of health insurer Aetna last year.

Walmart has been looking to expand its health business foryears. It recently hired a former senior executive of insurerHumana Inc. to lead its health-care arm, leading to speculationthat the companies could forge closer ties. Walmart and Humana haveexplored ways to deepen an existing health-care alliance, a personfamiliar with the matter said in March. The companies already worktogether on prescription plans for Medicare patients.

The split won't affect Medicare beneficiaries in CVS's Part Ddrug plans. It also won't apply to Walmart's Sam's Club stores, CVSsaid in the statement. CVS said the move won't materially impactits 2019 results.

News of the split was reported earlier by the Wall StreetJournal.

Read more: 

• Walmart taps former Humana exec for health carebusiness
• CVS now owns Aetna. What's next?
• Consumers may hate drug costs, but they like theirpharmacies

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