Topeka Kansas abandoned plans Friday to drop Walgreen Co. stores from the pharmacy network for a prescription drug program covering about 100,000 residents.
The state’s announcement came the same day Walgreen and CVS Caremark Corp. settled a dispute over Caremark’s reimbursements for prescriptions. Last week, the two companies said they’d stop doing business together.
CVS Caremark manages the prescription drug program for Kansas’ state workers, which also covers teachers, some local government workers, some retirees and family members. The state had said participants wouldn’t be able to get discount prescriptions at Walgreen’s 66 stores in Kansas as of July 9.
“We’re pleased that the two companies have reached an agreement and that our members who use Walgreens pharmacies won’t experience any disruption,” said Doug Farmer, director of the overall health plan for state workers.
The Kansas Organization of State Employees, the largest union for state workers, had questioned CVS Caremark’s management of the prescription drug program. But last month, a state commission approved a new contract with CVS Caremark for another three years.
KOSE Executive Director Jane Carter said the Walgreen-CVS Caremark agreement is good news, but she is frustrated that a dispute by two large corporations could inconvenience thousands of Kansans.
“Once again, the little guy just has to take what comes down the pike,” she said.
Officials at the Kansas Health Policy Authority, which oversees the health plan for state workers, had said even with Walgreens stores dropped, participants in the prescription program still had plenty of choices.
CVS Caremark, based in Woonsocket, R.I., was both the manager of prescription benefits for 53 million Americans last year and Walgreen’s biggest competitor among pharmacy chains. Walgreen, based in Deerfield, Ill., is the nation’s largest drug store chain.
Walgreen wanted Caremark insurance to pay more for drugs and to end policies encouraging consumers to use CVS pharmacies. CVS Caremark argued that Walgreen was demanding unreasonable rates that would drive up consumer costs.
Walgreen and CVS did not disclose the terms of their settlement.
Under the Kansas drug program, the state paid $61 million last year for prescriptions and participants paid $21 million. Those figures are expected to rise this year to $64 million for the state and $22 million for participants.
Administrative fees paid to CVS Caremark are expected to increase 31 percent, from $1.6 million last year to $2.1 million this year.
CVS Caremark faced scrutiny from Kansas legislators earlier this year. KOSE had questions about drug costs for workers, and a national union group suggested the Kansas plan’s participants were paying too much for many prescriptions. CVS Caremark said the claim was based on misleading information.
A Kansas House committee had a hearing, but Farmer defended the state’s contract with CVS Caremark as the most cost-effective possible, and legislators didn’t do more with the complaint.