DEERFIELD, Ill.–(BUSINESS WIRE)–After many months of talks over unreasonably low and below-market payment rates by CVS Caremark Corp. for four prescription plans, Walgreens (NYSE:WAG)(NASDAQ:WAG) today withdrew as a pharmacy provider from the plans.
Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Inc., Progressive Casualty Insurance Co. and Wisconsin Education Association Trust. Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.
“This is not where we wanted negotiations to lead,” said Trent Taylor, president of Walgreens Health Services, the managed care division of Walgreen Co. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.
“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark. We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”
Walgreens recently received a new and improved rate from CVS Caremark for another plan it manages that also had been paying below market. But CVS Caremark declined to provide the same solution for these four other plans.
“In an effort to be as open and transparent as possible in negotiations, we even offered to open our books directly to the employer groups and show them how much our pharmacies are paid by CVS Caremark,” said Taylor. “Unfortunately, CVS Caremark wouldn’t allow us to do that.”
Walgreens contracts with thousands of group health insurance plans that use a different company than CVS Caremark to administer their drug benefit. Under these other plans, Walgreens receives appropriate payments for prescriptions and continues to serve their members.
“We hope to continue talks with CVS Caremark so that we can once again serve patients under these plans,” said Taylor.
Walgreen Co. is the nation’s largest drugstore chain with fiscal 2007 sales of $53.8 billion. The company operates 6,059 stores in 49 states and Puerto Rico, including 77 Happy Harry’s stores in Delaware and surrounding states. Walgreens is expanding its patient-first health care services beyond traditional pharmacy through Walgreens Health Services, its managed care division, and Take Care Health Systems, a wholly owned subsidiary that manages convenient care clinics at drugstores. Walgreens Health Services assists pharmacy patients and prescription drug and medical plans through Walgreens Health Initiatives, Inc. (a pharmacy benefit manager), Walgreens Mail Service, Inc., Walgreens Home Care, Inc. and Walgreens Specialty Pharmacy, LLC.
