Tit for Tat: CVS Caremark Kicks Walgreens Out of Its Network

Some of our clients have asked about the rationale for the Walgreens/CVS-Caremark issue. Clearly money is the primary rationale. However, the National Community Pharmacist Association (NCPA) is providing some other rationale from their viewpoint. We thought that you would find this of interest.

NCPA eNews Weekly | June 15, 2010

Two days after Walgreens announced that it would not participate in any future CVS Caremark network plans, CVS Caremark responded by terminating Walgreens’ participation in all its network effective July 9. The giant chain pharmacy/PBM/ mail order conglomerate said it would drop Walgreens from its Medicare Part D network effective Jan. 1, 2011.

When Walgreens announced its decision June 7, it cited many of the same problems experienced by independent pharmacies and prompted NCPA 18 months ago to launch a campaign for a Federal Trade Commission investigation of CVS Caremark’s business and patient privacy protection practices. Last November, CVS Caremark disclosed that it was under FTC investigation. In addition, 24 states are probing the company created by the merger of the pharmacy chain with a PBM/mail order firm. NCPA members have had a number of meetings with FTC officials about their experiences since the 2007 merger.

Those experiences largely mirror those cited by Walgreens:

CVS Caremark limits patient choice by requiring patients in Maintenance Choice and other plans to use CVS retail pharmacies or Caremark mail order facilities.

CVS Caremark provides little or no information when a CVS Caremark prescription drug plan is transferred to a different and differently-priced CVS Caremark pharmacy network, or when CVS Caremark acquires a new prescription drug plan as a client.”

CVS Caremark reimbursement rates are unpredictable and payments for certain drugs often don’t reflect the market.”

“If a large, publicly traded chain with the clout of Walgreens finds the business practices of CVS Caremark untenable, then it’s easy to understand how much greater the problems have been for independent community pharmacists and their patients,” commented Joseph H. Harmison, PD, NCPA president. “The concerns expressed by Walgreens echo and further validate the concerns expressed by independent community pharmacists and their patients.”

“Unfortunately, for most independent pharmacies, simply telling CVS Caremark ‘no’ isn’t a viable business option,” Harmison continued. “The evidence is piling up and hopefully corrective action will be taken that either erects substantial walls between CVS and Caremark or rescinds the merger so that the market can operate equitably without one company abusing the system for its enrichment at the expense of patients and fair competition among pharmacies.”

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.