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CVS Cuts Walgreens From PBM; Others Look to Cash In

WOONSOCKET, R.I. — CVS Caremark here Wednesday severed Walgreens’ participation in its pharmacy benefit management networks, including Medicare Part D.

WOONSOCKET, R.I. — CVS Caremark here Wednesday severed Walgreens’ participation in its pharmacy benefit management networks, including Medicare Part D.

CVS said the termination would be effective within 30 days from June 9, and as of Jan. 1, 2011. for Medicare Part D.

This follows Walgreens’ announcement Monday that it would no longer participate in CVS Caremark PBM for new and renewed prescription drug plans, but it would continue to service patients currently under contract.

Sources report this represents about 7% of Walgreens’ annual sales from Caremark plans, which was about $4.5 billion in fiscal 2009.

In response, Walgreens, Deerfield, Ill., said it was disappointed but not surprised that CVS decided to terminate Walgreens' participation in the PBM.

“CVS Caremark’s move plainly contradicts its own statement on June 7 that their mission is to provide broad access and choice for consumers. Their patent disregard for patient choice and broad access reflected in today’s decision reinforces our conviction that it would not have been in the best interests of our patients, pharmacists or shareholders to grow our business with CVS Caremark,” said Kermit R. Crawford, executive vice president of pharmacy, in a company-issued statement.

The Federal Trade Commission has been conducting an ongoing antitrust investigation into CVS Caremark practices.

Also Wednesday, the National Community Pharmacists Association submitted recommendations to the U.S. Senate’s Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights oversight hearing on “Oversight of the Enforcement of Antitrust Laws.”

One recommendation was to take enforcement action in response to allegations from independent pharmacies and their patients against CVS Caremark for using “confidential information to steer patients away from independent community pharmacies to their own retail or mail order pharmacies.”

“The FTC and DOJ should address the anti-competitive and anti-privacy practices of CVS Caremark by either erecting proper safeguards or dissolving the merger, said Joseph H. Harmison, NCPA president, in the statement issued to the subcommittee.

It is not clear what the dispute between the two rival drug chains means for supermarket pharmacy chains.

“It will be interesting to watch and see what happens next,” said Bruce Kneeland, pharmacy industry consultant, Royersford, Pa.

“Will someone with a big footprint jump on board and walk away from CVS, especially if they believe they have been aggressively mistreated by CVS Caremark? Or, will they put up a banner and say, ‘We are happy to accept CVS Caremark customers’”? My impression is — it is the classic nature of the business — most will try to steal customers away from Walgreens.”

A&P, Montvale, N.J., issued a media alert today with a question: Is Walgreens no longer taking your CVS/Caremark prescription plan?

A&P followed up with a response that said A&P would gladly accept the CVS/Caremark plan and would transfer all prescription from potential Walgreens’ patients. It also promoted free membership in the Live Better! Wellness program for extra discounts of up to 25% on products throughout the store.

A&P could not be reached for further comment.

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