CVS Health Adapts to Market Shifts With Pharmacy Shutdowns Within Target Stores

CVS Health Corp CVS is reportedly looking to close some of its pharmacies located within Target Corporation TGT stores in the coming months. 

The closures, slated to commence in February and conclude by the end of April, are part of CVS’s strategic evaluation of changes in population dynamics, consumer buying patterns, and anticipated health needs.

Before the closures, prescriptions from the affected Target-based pharmacies will be transferred to nearby CVS Pharmacy locations, the Wall Street Journal noted. 

This move aligns with an industry-wide trend as U.S. pharmacy chains, including competitors such as Walgreens Boots Alliance Inc WBA, implement cost-cutting measures to address reduced consumer spending amid inflation concerns and heightened competition.

The decision to close specific locations is driven by CVS’s careful assessment of evolving market dynamics. The WSJ report did not disclose the precise locations affected.

CVS Health acquired Target’s pharmacies and clinics in a $1.9 billion deal in 2015, adding approximately 1,660 pharmacies to its portfolio.

In December, CVS Health announced a new approach called CVS ‘CostVantage’ that evolves the traditional pharmacy reimbursement model and brings greater transparency and simplicity to the system.

CVS CostVantage will define the drug cost and related reimbursement with contracted pharmacy benefit managers and payors, using a transparent formula built on the cost of the drug, a set markup, and a fee that reflects the care and value of pharmacy services.

In August 2023, Blue Shield of California decided to discontinue its utilization of CVS Health’s CVS Caremark, the pharmacy-benefit manager responsible for negotiating drug prices and overseeing services like mail-order pharmacy.

Although CVS Caremark will no longer oversee the comprehensive administration of drug benefits, it will continue to oversee specialty drugs, typically the most intricate and costly medications.

Price Action: CVS shares are down 3.45% at $76.21 on the last check Friday.

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