I’m surprised this took the 3 years to play out. I talked about this back in 2007. Today, Walgreens announced that they would no longer participate with CVS Caremark networks for new networks and renewals. (See the CVS Caremark response here.)
Personally, I’m a little surprised they didn’t limit it just to the Maintenance Choice contracts which is where they have issues (like Mandatory Mail). Walgreens has fought for years against PBMs that implement models that limit choice.
I guess one of the big questions here is whether CVS Caremark allows Walgreens into their Maintenance Choice network. Walgreens (for example) has multiple 90-day networks. One which is just with Walgreens and one that includes other retailers.
Other questions I would have are:
1. Will CVS Caremark pull out of the Walgreen’s PBM network or their 90-day networks?
2. Will other retailers pull out of the CVS network?
3. Will Walgreens be more aggressive with other PBMs or can they only “fight” one at a time?
4. Will this help CVS Caremark focus their retail acquisition strategy to areas where Walgreens is stronger than them really creating a retail battle and less of a PBM battle?
I’m sure in some geographies (e.g., St. Louis, NYC) this may present some challenges where the CVS presence is not as strong, but in the end, most consumers have access to more retail pharmacies than they need and most PBM decisions are heavily influenced by price. If CVS Caremark can offer a price point that takes into account the disruption to the member base of not having Walgreens in the network, they can win. If that hurts them too much or they can’t do it, they’ll have to figure out how to make nice with Walgreens.
It will be interesting!