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CVS Health Corp said on Tuesday Walmart Inc is leaving its network for commercial and Medicaid prescription drug plans after the two companies failed to agree on pricing. CVS said the dispute would not impact Walmart's presence in its Medicare Part D pharmacy network, which according to Cowen & Co analyst Charles Rhyee was a bright spot as it represented a larger chunk of CVS' scripts. (Banerjee and Joseph, 1/15)

Walmart confirmed its exit from the CVS Health pharmacy insurance program, called CVS Caremark, after CVS refused the retail giant’s demand for larger reimbursements for the prescription drugs it dispenses. The move affects Walmart customers with CVS Caremark pharmacy coverage through employer-sponsored insurance and state Medicaid managed-care plans. It does not affect Medicare beneficiaries. It also does not affect pharmacies at Sam’s Club stores. (Rowland, 1/15)

Negotiations over rates reached a boiling point last week when Walmart sent a contract termination letter to CVS, according to people familiar with the situation. Walmart continued to negotiate with CVS as recently as last Friday, said one of these people. Walmart aims to continue discussions with CVS Caremark and is “trying to find a solution that benefits all parties,” said a spokeswoman for the retailer. “We are committed to providing value to our customers across our business, including our pharmacy, but we don’t want to give that value to the middleman. ... Walmart is standing up to CVS’s behaviors that are putting pressure on pharmacies and disrupting patient care.” (Wilde Mathews and Nassauer, 1/15)

Walmart indicated it was resisting efforts by CVS to steer consumers to certain pharmacies to have their prescriptions filled. A company spokeswoman said in an emailed statement that the retailer was committed to giving customers access to affordable health care, “but we don’t want to give that value to the middle man.” “This issue underscores the problems that can arise when a PBM can exert their unregulated power to direct members on where to fill their scripts, disrupting patients’ health care,” the statement said. “Walmart is standing up to CVS’s behaviors that are putting pressure on pharmacies and disrupting patient care.” (Langreth and Boyle, 1/15)

As a pharmacy benefit manager, CVS Caremark represents health plans, negotiating rebates with drug manufacturers and reimbursing retail pharmacies for the drugs they dispense. But many have questioned how CVS could fairly control reimbursements to retail pharmacies with whom CVS is in direct competition as the nation’s No. 1 pharmacy retailer. (Schladen, 1/15)

Walgreens Boots Alliance Inc. is teaming with Microsoft Corp. to design new “digital health corners” for its stores, as both companies look to battle an ever-expanding Amazon.com Inc. For Walgreens, the pharmacy giant must contend with looming competitive threats from Amazon and other upstarts looking to disrupt the drugstore business. Meanwhile, Microsoft is angling to gain ground against Amazon Web Services by offering back-end computing muscle to retail, grocery and health operators that don’t want to give more business to one of their biggest foes. (Koons and Bass, 1/15)

The impact of the seven-year partnership, announced Tuesday, remains to be seen, but it represents another attempt by a large provider of health care services to increase the use of technology to deliver medicines and medical advice. The world’s largest technology companies, including Apple, Amazon, and Google, are making aggressive forays into health care, both through partnerships with providers and the development of their own health care businesses. (Ross, 1/15)