Citing continued cuts in pharmacy reimbursements, Walgreen Co. is set to pull about half of its pharmacies in Washington from the state's Medicaid program next month.


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Walgreens to pull stores from Washington's Medicaid program

January 14th, 2010

DEERFIELD, Ill. – Citing continued cuts in pharmacy reimbursements, Walgreen Co. is set to pull about half of its pharmacies in Washington from the state's Medicaid program next month.

The drug chain said Wednesday evening that it plans to stop filling Medicaid prescriptions at 64 of its 121 stores in Washington effective February 15. According to the company, those pharmacies account for 75% of its total Medicaid business in the state.

Walgreens is the second pharmacy chain in the past week to announce plans to cut back on filling Medicaid prescriptions in Washington because of the state's reimbursement reductions. On January 7, Bartell Drugs said it aims to discontinue Medicaid prescriptions at 15 of its 57 stores starting February 1.

Like Bartell, Walgreens said the most recent payment reduction stems from a Massachusetts court ruling last fall that reduced the industry pricing standard, even though pharmacies' acquisition costs haven't changed. The federal court decision, which upheld an earlier ruling approving settlements in the First DataBank and Medi-Span case, meant that as of September 26, average wholesale prices (AWPs) of drugs paid to pharmacies would be reduced to 120% of the wholesale acquisition cost (WAC).

Walgreens noted that although many private insurance providers have adjusted pharmacy reimbursement rates in the wake of the court ruling, Washington's Medicaid program has not.

The result, the chain stated, has been much lower payments to pharmacies that "severely impact the economic viability of doing business in Washington." According to the retailer, the most recent payment reduction has resulted in Washington Medicaid reimbursing Walgreens below its cost to break even on nearly 95% of brand-name medications.

"Walgreens is committed to providing cost-effective pharmacy services across the state. We have thousands of loyal patients who appreciate and trust our pharmacists, and we are absolutely committed to patient care," Kermit Crawford, Walgreens' senior vice president of pharmacy, said in a statement. "That's why we have worked, and are committed to working, diligently with the state on ways to lower its spending on prescription drugs while ensuring patients have access to the full benefit of their drug therapy."

Walgreens pointed out that over the past year, the company and Washington's pharmacy community have identified tens of millions of dollars in savings to the state through more effective medication management — savings that would more than offset the lower payments pharmacies are now receiving.

The drug chain added that if pharmacies are forced out of Washington's Medicaid program due to the payment reductions, it's likely that other health care costs will increase because those patients may encounter other health issues if they lose access to their medications.

"Now is the time, with the legislature back in session, to fix the state's pharmacy reimbursement rates," Crawford commented. "We look forward to working with elected officials over the course of the next several weeks to address this important issue."

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