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Walmart is leaving CVS Health's pharmacy network. Photo: John Gress/Corbis via Getty Images

Walmart is prepared to remove its pharmacies from the drug benefit network owned by CVS Health, as the two retail giants spar over drug pricing terms.

Why it matters: If a new agreement isn't reached by May, millions of people who fill their prescriptions at Walmart may have to find new pharmacies, and some of them inevitably will find their way to CVS' own drugstores.

Details: The decision, first reported by the Wall Street Journal, would affect people who have CVS drug benefits through their employer or Medicaid. It's worth remembering how CVS' corporate structure works:

  • CVS operates almost 10,000 pharmacies, but its bigger business is the pharmacy benefit manager, called Caremark. The PBM negotiates drug prices and sets up networks of pharmacies for insurance plans, and in this case, the PBM would no longer include Walmart's pharmacies as in-network options.

What they're saying: Both sides are willing to reach a new agreement, but neither side is particularly happy.

  • CVS said it "could not agree to [Walmart's] recent demands for an increase in reimbursement" and is preparing to move on without Walmart in its PBM networks.
  • Walmart's statement was more pointed: "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. ... Walmart is standing up to CVS's behaviors that are putting pressure on pharmacies and disrupting patient care."

What they're not saying: A CVS spokesperson did not immediately respond to questions about how many Walmart shoppers it expects would go to CVS pharmacies. Both sides also would not disclose anything related to financial terms.

Between the lines: This spat could have a far bigger negative effect on Walmart than CVS, and it shows how much market power CVS has with prescription drugs.

  • Walmart leaving CVS' networks is not expected to hurt CVS financially, considering those people likely would move to other nearby, in-network pharmacies.
  • Some of the most valuable retail customers are the people who pick up prescriptions, since they shop more frequently and often make other in-store purchases when they get their drugs. That's what Walmart is losing and what CVS is potentially gaining.

Go deeper

Schumer's m(aj)ority checklist

Senate Minority Leader Chuck Schumer. Photo: Tasos Katopodis/Getty Images

Capitalizing on the Georgia runoffs, achieving a 50-50 Senate and launching an impeachment trial are weighty to-dos for getting Joe Biden's administration up and running on Day One.

What to watch: A blend of ceremonies, hearings and legal timelines will come into play on Tuesday and Wednesday so Chuck Schumer can actually claim the Senate majority and propel the new president's agenda.

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.
Off the Rails

Episode 3: Descent into madness ... Trump: "Sometimes you need a little crazy"

Photo illustration: Sarah Grillo/Axios. Photos: Tom Williams/CQ-Roll Call, Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 3: The conspiracy goes too far. Trump's outside lawyers plot to seize voting machines and spin theories about communists, spies and computer software.

President Trump was sitting in the Oval Office one day in late November when a call came in from lawyer Sidney Powell. "Ugh, Sidney," he told the staff in the room before he picked up. "She's getting a little crazy, isn't she? She's really gotta tone it down. No one believes this stuff. It's just too much."