UPDATE Friday, January 18, 2019: Just this morning, CVS Caremark announced they have reached a multi-year network agreement with Walmart, which has chosen to participate following its initial decision to exit. While the climate is ripe for change, the status quo is a powerful force.
In a surprising move, retailer Walmart will no longer participate with competitor CVS’s Caremark pharmacy benefits manager (PBM). Walmart claims that the CVS-owned PBM is seeking to steer patients to certain pharmacies and, through formulary management, higher-cost medications. Walmart also brought out to the debate a criticism of the profits PBM middlemen add to drug costs. Caremark claims that Walmart’s requested price increases were unacceptable. The fallout from this announcement will be interesting.
There is no doubt that Walmart will be proactive in restoring this potential revenue hit. Their alignment with Humana has highlighted a desire by the retailer to more directly tap into the healthcare sector. Interesting, retailer Costco has also aggressively moved into the PBM space and has introduced their own PBM which focuses on what they claim is lower-cost pass through pricing. And no doubt Amazon, with their alignment with Berkshire Hathaway and JPMorgan and their acquisition of online pharmacy PillPack (specializing in presorted meds), are going to add more compression to pharmacy prices.
And as the Democrats take the House, three new pharma bills have been introduced:
- To allow Medicare to more effectively negotiate prices
- To allow importation of medications from Canada
- To facilitate the release of generic medications when costs for existing drugs get more expensive
Meanwhile, there are some big moves in drug-maker mergers with Bristol-Myers Squibb and Celgene announcing a planned merger and Eli Lilly and Company announcing its acquisition of Loxo Oncology, Inc.
Netflix should be concerned – binge-watching the pharmacy soap opera might take away some of their viewers.