New York City Walgreen Co. and CVS Caremark Corp. announced Friday that they have settled a contract dispute over reimbursements for drug prescriptions and have managed to salvage a relationship worth billions of dollars.
Both companies said in a statement on Friday that Caremark members would continue to be able to have their prescriptions filled at Walgreens pharmacies.
Details of the agreement were not disclosed but the chains did say that it was a multi-year deal. Analysts had said the companies' dispute was jeopardizing billions of dollars in sales for each chain, and predicted they would quickly come to a resolution, despite their very public conflict.
Walgreens and CVS have been negotiating for months and earlier in June said they would end the partnership that allows people whose prescription drug benefits are handled by Caremark to be reimbursed for prescriptions filled at Walgreen's pharmacies.
Walgreens wanted to be paid more for filling prescriptions. Caremark makes money by reducing costs for plan members and sponsors.
"We are very pleased with the outcome of this mutual, multiyear agreement that meets our business objectives," Kermit Crawford, executive VP pharmacy, Walgreen, said in a statement. "The agreement makes good business sense, provides the framework we need to operate our business going forward, and assures choice and convenience for the many consumers who look to us for quality pharmacy care."
Caremark has one of the largest pharmacy benefits management networks. It negotiates contracts with employers and handles the drug benefit part of their health plans, paying pharmacies to fill prescriptions. It saves money by negotiating volume discounts.
"We are pleased to have reached a mutually agreeable solution together with Walgreens that is consistent with our top priority to provide convenient access to affordable high-quality pharmacy health care," Per Lofberg, president of CVS' pharmacy benefit management business, said in a statement.