Walmart Says It Was Blindsided by Its Ouster from Tricare Network

Days before Tricare pharmacy benefits manager Express Scripts announced that Walmart is leaving the Tricare network, the retail giant had inked a "multi-year" deal to remain, according to a company spokesman.

The spokesman said late Friday that Walmart was "surprised" to learn that its pharmacy contract had been terminated, adding that the company and Express Scripts signed an agreement Sept. 30 for it to remain in the network.

"We value our Tricare and [Defense Department] customers and are disappointed in Express Script's [sic] decision and we have requested more information from them to understand their decision," Luke Kleyn, a vice president at Walmart, said in an email to Military.com. "We have asked Express Scripts to honor the agreement we both recently signed."

Kleyn said the new contract would have allowed military beneficiaries to continue all their prescriptions at Walmart and Sam's Club "for the next several years."

"We hope to come to a resolution to continue as a pharmacy provider for the Tricare network," he added.

An Express Scripts spokesperson did not directly address questions from Military.com about the negotiations and the deal described by the Walmart executive, but issued a statement citing pricing as the reasoning behind ending its relationship with Walmart.

"Walmart's rates were not competitive enough to stay in the network and we are removing them effective Dec. 15, 2021," spokesperson Jennifer Luddy said in an email. She said that more than 6% of Tricare beneficiaries fill prescriptions at Walmart or Sam's Club, meaning approximately 600,000 people have used the stores for their medications. 

She added that Express Scripts is "helping beneficiaries ensure an easy transition."

Tricare provides coverage to 9.6 million beneficiaries worldwide.

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Walmart first signed an agreement with Express Scripts in 2018 to provide brand-name prescription medications to beneficiaries who use Tricare and other insurance plans that use the pharmacy benefits management company.

Walmart also provides many generic medications to all customers -- regardless of insurance -- through a program that provides 30-day prescriptions for $4 and 90-day prescriptions for $10.

Military beneficiaries still will be able to use that program even if Walmart leaves the network, company officials said.

But the change means prescriptions for brand-name and specialty medications not offered through Walmart's discount program will be considered non-network. Beneficiaries will have to pay the full cost of their medication up front and file a claim with Tricare for partial reimbursement.

Last week, Express Scripts began notifying Tricare beneficiaries who use Walmart or Sam's Club pharmacies that their stores would no longer be in their retail pharmacy network as of Dec. 15. 

The letter includes three local network pharmacy options and instructions on how to transfer prescriptions.

Those who fill specialty medications at Walmart or Sam's Club also will receive a letter as well as a phone call from Express Scripts to help them transfer their prescriptions.

According to Express Scripts, these beneficiaries will have a 30-day grace period to transfer their prescriptions.

As a pharmacy benefit manager, Express Scripts serves as a middleman, overseeing the Defense Health Agency's pharmacy program, including management of the retail pharmacy network, Tricare's mail order pharmacy, claims reimbursement, and beneficiary and pharmacy support services.

In July, the Defense Department awarded a contract to Express Scripts worth up to $4.3 billion over the next seven years to continue as Tricare's pharmacy benefits manager.

Luddy said Monday that pharmacies set reimbursement rates for medications, and Express Scripts negotiates discounts, conducting "continuous evaluations of the network to ensure best value and care for the Department of Defense, beneficiaries and taxpayers, and to pass on more savings to the government."

Express Scripts also announced last week that CVS will return to the Tricare network after a five-year hiatus.

Walmart and Sam's Club operate roughly 5,300 pharmacies nationwide, including many in rural areas, while CVS has nearly 10,000 locations.

"This change provides more competitive rates for the Tricare pharmacy benefit and expands quality, convenient pharmacy choices nationwide," Luddy said in a statement to Military.com.

Having access to Walmart pharmacies has been especially convenient to military families and retirees who live in rural or remote areas that may lack a chain pharmacy. Plus, many have come to rely on the discounted generic medications, which are offered at rates lower than Tricare copayments.

In a blog post last week, Karen Ruedisueli, director of government relations for health affairs at the Military Officers Association of America, said her organization believes that the change will maintain the quality of the Tricare pharmacy program and may even improve it for many beneficiaries.

"We understand families who fill prescriptions at Walmart or Sam's Club will be inconvenienced, but others will be pleased to once again have CVS as an option for their prescription medications," Ruedisueli wrote.

Pharmacy copays have risen substantially over the past 10 years, in large part due to cost but also as required by Congress as part of a cost-cutting measure to the defense medical budget.

This year, Tricare beneficiaries pay $13 for a 30-day supply for a generic drug and $33 for a brand-name medication at retail pharmacies. Non-formulary drugs not listed in Tricare's list of covered medications cost $60.

Copayments for the mail-order pharmacy run $10 for a generic prescription and $29 for a brand-name drug for a 90-day script. And the rates are expected to rise next year.

According to Express Scripts, the Tricare pharmacy network covers 56,000 stores, including chains such as Walgreens and Rite Aid and supermarkets like Kroger and Publix.

Editor's note: This article has been updated to correct the 2021 copayment rate for a generic prescription at a Tricare network pharmacy.  

-- Patricia Kime can be reached at Patricia.Kime@Military.com. Follow her on Twitter @patriciakime.

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