2 retail giants are feuding over prescription drugs and it *signals* a 'seismic shift' for the future of healthcare

• CVS Health said some customers who use its Caremark pharmacy network won't be able to fill their prescriptions at Walmart stores, after April 30.
• CVS said Walmart wanted to raise its prices too much. Walmart said it's "standing up to CVS's behaviors that are putting pressure on pharmacies and disrupting patient care."
  
• The dispute shows how efforts by corporate titans to reshape the US healthcare system can affect ordinary consumers.

Two corporate giants are breaking ties in a dispute that previews the reality of how customers will get caught in the middle of efforts to reshape healthcare.

CVS Health said some customers who use its Caremark pharmacy network won't be able to pick up their prescriptions at Walmart pharmacies after April 30, because Walmart wanted to raise the cost of filling prescriptions. The change applies to commercial and managed Medicaid customers, but not to individuals with Medicare prescription drug plans. It also doesn't affect Sam's Club stores.

George Hill, a healthcare analyst at RBC Capital Markets, called the news a "seismic shift."

He said it's an early sign of how CVS will use its massive negotiating power to its own benefit, after the company acquired the health insurer Aetna late last year. The goal is to direct more people who use CVS and Aetna insurance products into the company's drugstores, Hill said.

Read more: Amazon is threatening the future of independent pharmacies. Here's how they're fighting back.

"We suspect CVS is excluding Walmart both because the large retailer is not price competitive in pharmacy, and also as the payer looks to incrementally steer traffic to its owned locations," Hill wrote in a research note. "We believe this step represents another move by CVS to more vertically integrate the service model it provides to its commercial customers."

CVS has said that directing Aetna customers into its stores to receive healthcare is a major element of the strategy for the combined company, because that can keep them healthier at a lower cost. To make space, CVS is removing some products from the front of the stores where it's piloting that new approach, the company revealed last week.

T.J. Crawford, a CVS spokesman, said that Walmart's exclusion from Caremark isn't designed to push more customers into CVS stores. He noted that about 63,000 pharmacies will remain in the Caremark network.

"We would expect that prescriptions previously filled at Walmart will move to a number of different pharmacies in our network, including nearby independently-owned, community-based pharmacies, other local pharmacies in grocery stores and mass merchants, as well as regional and national chains," he said. "Bottom line, members will continue to have choice based on their plan design."

About 93 million people rely on CVS's Caremark for their prescriptions, though it's not clear how many will be affected by the dispute. CVS said less than 5% of its potentially affected members pick up their drugs exclusively at Walmart.

Typically, employers and insurance companies hire Caremark, which is one of the three major pharmacy-benefits managers in the US, to manage drug benefits for their workers or customers.

Read more: CVS Health just revealed a key piece of its plan to change how Americans get healthcare

Walmart, the biggest retailer in the world, pointed the finger back at CVS, saying the company was using its negotiating leverage to unfairly steer patients away from a key rival.

"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' healthcare," Walmart said in a statement. "Walmart is standing up to CVS's behaviors that are putting pressure on pharmacies and disrupting patient care."

Walmart and CVS are already rivals in retail, though many of CVS's other rivals in retail-from Walgreens to Kroger-remain in its pharmacy network.

Walmart has signaled that it plans to expand in healthcare, a move that could encroach on CVS's turf, particularly as CVS itself increases the types of healthcare it provides in its stores.

Walmart has been testing a number of approaches for both its workers and customers, and is preparing to play a more "aggressive'' role, Marcus Osborne, Walmart's vice president of health and wellness transformation said late last year.

"There's a need to create a real, true front door for healthcare that hasn't existed," Osborne said. "And to put that door where people are and use technology in an appropriate way, that's what we're trying to do."

• Read more:
• A VC wanted to bet on a company to upend the $360 billion prescription-drug industry. He couldn't find one, so he just built his own.
• The CEO of Merck has an ominous warning for the middlemen who stand between drug makers and patients
• 'None of us wants to be Sears': A Walmart exec explains why the retailer will be making more 'aggressive' strides into healthcare
• Take a look inside Walgreens' futuristic store where it's plotting new ways to take on Amazon and CVS