SEATTLE — A move by Washington state officials that could result in the loss of prescription drug benefits for about 500,000 adults whose prescriptions are covered by Medicaid has been described as a “perilous situation” by the National Association of Chain Drug Stores.

NACDS is working with its members and other allies to develop and implement strategies to address the situation.

According to the Seattle Times, the cutbacks appear certain unless state lawmakers provide special funding when they reconvene in January. The report notes that the state Medicaid adult drug program will be eliminated in March if the legislature can’t come up with $40 million before February 1.

Under the plan by the state Department of Social and Health Services (DSHS), Washington will no longer provide funding to offset Medicare copayments for dual eligibles. Effective January 1, all Medicare Part D clients will have to make their own copayments directly to their pharmacy or the pharmacy will be legally able to deny them prescription drugs and services.

In addition, the state is proposing (effective March 1) to eliminate all Medicaid outpatient prescription drug coverage to patients 21 and older, including fee-for-service and those enrolled in managed care.

Washington apparently would be the only state to eliminate the program.

The Seattle Times quotes state Medicaid director Doug Porter as describing the potential loss of the program as being “beyond painful.”

In September, Gov. Christine Gregoire ordered a 6.3% reduction in all state services to cope with an expected $1.4 billion budget shortfall. To meet this mandate, DSHS says it will need to trim about $110 million from the Medicaid programs it administers.

Porter told the Seattle Times that the adult prescriptions program cannot be protected in the DSHS cuts because federal law requires states to maintain many other Medicaid benefits. He added that the department must eliminate every optional service to meet the governor’s order.

As an alternative, Porter suggested the state might take money from other agencies, such as the health care authority, which administers health care coverage for state employees and some low-income Washington residents.

This is not the first time that a budgetary shortfall in Washington has hit Medicaid pharmacy benefits. As recently as last winter and spring, Walgreen Co. and Seattle-based Bartell Drugs cut pharmacy services in Washington because of reduced Medicaid pharmacy reimbursements. Bartell stopped filling Medicaid scripts at some stores in February, while in April Walgreens stopped accepting new Medicaid prescriptions in its 120-plus stores statewide.

Under Washington’s current payment structure, Walgreens loses money on nearly 95% of branded medications dispensed to Medicaid patients, according to the chain.

Chain drug retailers identified millions of dollars in potential savings for the state from greater use of generic drugs, according to Walgreens, but their efforts proved futile.

Increasing the rate at which Washington Medicaid patients use generics by only 1% would have generated over $9 million in savings, the chain says.