Walgreen, CVS strike new deal, avoid split
Dispute centered on Caremark’s reimbursements
The companies, which said yesterday they have agreed on a multiyear deal but did not disclose its terms, were battling over the amounts Caremark reimburses Walgreen for filling prescriptions for Caremark patients.
Walgreen and CVS do billions of dollars in business together every year. Walgreen is the largest US drugstore operator and CVS’s Caremark is the third-largest prescription benefits manager.
At the same time, the CVS drug store chain is Walgreen’s top competitor.
Last week, the companies said they would end their relationship and Walgreen would stop accepting Caremark insurance.
Walgreen, based in Deerfield, Ill., with more than 7,500 stores across the country, wanted Caremark to pay it more for filling prescriptions, and it wanted Caremark to drop policies encouraging members to fill prescriptions at CVS’s 7,000 stores. Including the Walgreen and CVS chains, Caremark’s national network includes more than 64,000 pharmacies.
Caremark said last week that Walgreen was demanding unreasonable rates that would drive up health care costs for Caremark patients and benefit sponsors like employers. It said it would stop letting its patients fill prescriptions at Walgreen July 9.
Millions of prescriptions and billions of dollars in sales hung in the balance: Most people whose prescriptions are managed by Caremark would have had to go to other stores if they wanted to be reimbursed for their drug costs.
On June 7, Walgreen said it wanted to bring a gradual end to its relationship with Woonsocket, R.I.-based CVS Caremark. Two days later, CVS Caremark upped the ante by saying it wanted to break up in a month.
Kermit Crawford, executive vice president of pharmacy for Walgreen, said in a statement the new pact “assures choice and convenience for the many consumers who look to us for quality pharmacy care.’’
Per Lofberg, president of CVS’s pharmacy benefit management business, said: “We are pleased to have reached a mutually agreeable solution together with Walgreens that is consistent with our top priority to provide convenient access to affordable high-quality pharmacy health care.’’