Walmart says it will no longer accept CVS prescription plan

Walmart said Tuesday that it would no longer honor prescription drug coverage from CVS Health, leaving large numbers of Walmart customers searching for a new pharmacist and amplifying concerns about the growing market power of the CVS empire.

Walmart confirmed its exit from the CVS Health pharmacy insurance program, called CVS Caremark, after CVS refused the retail giant’s demand for larger reimbursements for the prescription drugs it dispenses.

The move affects Walmart customers with CVS Caremark pharmacy coverage through employersponsored insurance and state Medicaid managed-care plans. It does not affect Medicare beneficiaries. It also does not affect pharmacies at Sam’s Club stores.

Walmart and CVS did not provide an estimate Tuesday of how many people will be affected.

The dispute highlights recent mergers along the pharmacy supply chain that could ultimately narrow choices for consumers.

Walgreens has formed alliances with Humana and various Blue Cross Blue Shield plans. Amazon, meanwhile, is muscling in with its purchase last year of prescription retailer PillPack.

The fight with Walmart comes at a sensitive time for CVS Health, which is facing scrutiny over its recent merger with Aetna, a large health insurance company. The Justice Department has allowed the Aetna merger to proceed.

CVS Caremark was created when CVS bought Caremark Rx in 2007. It is what is known in industry parlance as a “pharmacy benefit manager,” or PBM, which provides prescription drug coverage and negotiates reimbursement prices for vendors.

PBMs have come under fire in Washington and in state capitols for their role in influencing who wins and who loses in the pharmaceutical supply chain. In some cases, they are accused of contributing to rising costs instead of holding them in check.

Rival pharmacies, especially small independent pharmacies that are getting squeezed, suspect that CVS Caremark plays favorites with affiliated CVS pharmacies. Walmart on Tuesday essentially accused CVS Health of using its clout to bully customers.

“This issue underscores the problems that can arise when a PBM can exert their unregulated power to direct members on where to fill their scripts, disrupting patients’ health care,’’ Walmart said in a statement. “Walmart is standing up to CVS’ behaviors that are putting pressure on pharmacies and disrupting patient care.’’

CVS said Walmart’s demand for bigger reimbursements would result in increased costs.

“At a time when everyone is working hard to find ways to reduce health care costs, Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,’’ CVS said in a statement. “The decision to leave the CVS Caremark commercial and Managed Medicaid retail pharmacy networks was Walmart’s, and Walmart’s alone.’’

CVS is the nation’s No. 1 pharmacy retailer, with 9,800 stores, compared with Walmart’s 4,500, which rank it fourth. With the loss of Walmart’s business, CVS said people covered by its pharmacy insurance will still have 63,000 pharmacies across the country to choose from, including CVS and others.

“There’s a big clash of titans here,’’ said Francis Palumbo, executive director of the University of Maryland School of Pharmacy’s Center on Drugs and Public Policy.

The lack of information about insurance reimbursements makes it difficult to judge whether Walmart’s move was justified, he said.

“The only thing I can do is raise questions,” Palumbo said. “Is Walmart just trying to strong-arm CVS because Walmart has so many stores?’’

On the flip side, he said, “We have Caremark, a huge PBM that owns a chain pharmacy and also Aetna. It just seems to me that they have so much market power in so many ways, they can afford to undercut others.’’