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CVS Unit Sues Rival Walgreen Over Drug Plans

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Bloomberg News

Published: November 8, 2007

A unit of CVS Caremark Corp., the largest U.S. drugstore chain by number of stores, sued rival Walgreen Co., claiming it prematurely canceled contracts to fill prescriptions for 70,000 people.

CaremarkPCS Health LP claimed Walgreen will disrupt its prescription drug plans for four companies unless stopped by a court order, according to a complaint filed Tuesday in Chicago federal court.

"Caremark and the tens of thousands of plan participants who depend on their Caremark-administered drug benefit to fill their prescriptions will suffer irreparable harm," the company said.

CVS bought the drug prescription plan administrator Caremark RX in March and last year acquired health clinics to compete with Walgreen. Deerfield, Ill.-based Walgreen also administers drug plans under its Health Initiatives program.
Walgreen spokesman Michael Polzin said Woonsocket, R.I.-based CVS Caremark had reduced the amount of payments it made to Walgreen for drugs covered by certain employer-sponsored plans "to a level that impacts our ability to provide a high level of pharmacy service to those plan members."

Negotiations aimed at reaching an agreement on reimbursement rates were unsuccessful, Polzin said.

"We remain committed to finding a solution," he added.
Caremark has asked U.S. District Judge Mark Filip to issue an injunction barring Walgreen from canceling the contract. Arguments on the matter are scheduled for Tuesday.

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