NEW YORK (Reuters): Walmart Inc (WMT.N), the world’s largest retailer, will remain part of CVS Health Corp’s (CVS.N) network for commercial and Medicaid pharmacy customers, the companies said on Friday, breaking a contract impasse disclosed earlier this week.
The companies did not provide financial terms of the new contract.
On Tuesday, CVS said the companies had failed to agree on pricing and that Walmart was leaving the pharmacy network for prescription drug plans that CVS manages for companies and health insurers and for the government-run Medicaid program for low-income people.
Walmart and CVS also said on Tuesday they were still in discussions. CVS shares gained 1.6 percent to $64.76 in premarket trading, recouping some of the stock’s losses on Tuesday.
“We view the agreement positively for CVS,” Cantor Fitzgerald analyst Steven Halper said in a research note, explaining that the loss of Walmart pharmacies could have negatively impacted CVS’ ability to sign up customers for its 2020 prescription drug plans.
Evercore ISI analyst Ross Muken said the speed at which the dispute was resolved likely points to the negotiating strength of pharmacy benefit managers in contract discussions. Consumers historically move to where their insurance is accepted, and Walmart likely would have lost out on the estimated 15 million to 20 million prescriptions it receives from CVS customers, Muken said. In 2012, Walgreens Boots Alliance and pharmacy benefit manager Express Scripts, now part of Cigna Corp, failed to come to contract terms.