Walgreens pushes back

February 15, 2010

Cutbacks to Washington's Medicaid reimbursements have resulted in Walgreens receiving below its cost or break-even point on nearly 95 percent of brand-name medications.

Walgreens executives have stated that they must withdraw about half their pharmacies from Washington State's Medicaid program, effective February 15.

Of Walgreens' 121 Washington pharmacies, 64 are pulling out because cutbacks to the state's Medicaid reimbursements have resulted in Walgreens receiving below its cost or break-even point on nearly 95 percent of brand-name medications, according to a statement from the retailer.

Walgreens' withdrawal is just the latest in state Medicaid reimbursement problems. Last fall the National Association of Chain Drug Stores (NACDS), the National Community Pharmacists Association (NCPA), and other pharmacy groups sued Washington, California, Minnesota, and New York over Medicaid reimbursements. The states did not adjust their reimbursements as a result of reductions in First DataBank and Medi-Span's average wholesale price (AWP) benchmark, as required by the Social Security Act, the groups said.

Kevin Crawford, Walgreens senior vice president of pharmacy, is calling for Washington's legislature to take action and help pharmacies with Medicaid reimbursements. "Now is the time, with the legislature back in session, to fix the state's pharmacy reimbursement rates. We look forward to working with elected officials over the course of the next several weeks to address this important issue," Crawford said.

In addition, Walgreens' executives and others in the state's pharmacy community have identified ways the state can lower its spending on prescription drugs. According to the Walgreens' statement, "If implemented, these savings would more than offset the lower payments pharmacies are now receiving."

Meanwhile, there have been no rulings in most of the lawsuits filed against states by NACDS and NCPA. However, the New York court denied the groups' request for a preliminary injunction, so the groups are considering the "next steps" they will take in the state, according to an NACDS representative.