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CVS Caremark, Wal-Mart contract dispute resolved

Consumers in Illinois and Michigan have concerns about the rising costs of prescription medications. According to the Wall Street Journal, these concerns have put pressure on drug manufacturers, pharmacies, and the middlemen between them known as pharmacy benefit managers to lower the costs.

The heightened tensions erupted in a dispute earlier this month between Caremark, a PBM associated with CVS Health, and Wal-Mart, with the retail giant threatening to rescind its participation in Caremark’s prescription drug coverage. This move had to potential to affect participants in Caremark plans as they would have to pay full price to get prescription medications filled at Wal-Mart pharmacies. This would have particularly affected consumers in more rural areas in which Wal-Mart is one of the few, or in some cases the only, pharmacy in the vicinity to participate in Caremark.

At issue was the way that pharmacies get paid for filling prescriptions. A PBM like Caremark reimburses the pharmacy when an individual with coverage fills a prescription at the facility. Wal-Mart reportedly asked CVS to maintain the rates at the current level, while Caremark alleges that Wal-Mart asked for an increased rate. 

If the two companies could not resolve the dispute, Wal-Mart allegedly threatened to leave the Caremark network, a move that could have happened as soon as February. However, according to Forbes, it was just a matter of days after reports of the initial dispute, that CVS Health announced that the two companies have reached a mutually beneficial, multi-year agreement under which Wal-Mart will continue to accept prescription drug coverage from Caremark. However, the announcement did not include any financial terms or more specific details.