Inside This Issue - News
Walgreens draws a line in the sand
June 29th, 2009
DOVER, Del. – State lawmakers here are considering ways to fight back against Walgreen Co. after the drug chain said it will stop filling prescriptions covered by Delaware’s Medicaid program when new reimbursement rates go into effect next month.
Under a bill that was introduced in the Delaware General Assembly last month by Sen. Michael Katz, a Democrat from New Castle County, the state would increase the gross receipts tax by 2% for any pharmacy that refuses to fill Medicaid prescriptions.
Right now that would only apply to Walgreens, which operates 66 of the 170 pharmacies doing business in Delaware.
In addition, state officials say they are considering ending a program that allows state employees to get their prescriptions from Walgreens.
The retailer said earlier this month that, starting July 6, it will no longer fill Medicaid prescriptions in Delaware because the state plans to reduce its reimbursement rate from average wholesale price (AWP) minus 14% to AWP minus 15%. Pharmacies would continue to receive a $3.65 dispensing fee for each prescription.
Delaware officials had originally proposed lowering the fee to AWP minus 16%. They say the cut is necessary to help trim an $800 million budget deficit.
“We felt it was reasonable to ask the pharmacies in our Medicaid program to sacrifice a one-percentage-point reduction in the amount we pay them,” Rita Landgraf, secretary of the state’s department of health and social services, said in an opinion piece recently published in the Wilmington News Journal. “The reduction still allows pharmacies to make a profit while saving money for taxpayers.”
Delaware officials argue that Walgreens accepts reimbursement rates from other state Medicaid programs that are the equivalent of or below the new Delaware rate and has not pulled out of those programs.
Walgreens says it accepted lower Medicaid rates in Rhode Island, for example, as part of a long-term deal but would not agree to those terms today.
Executives say the decision to pull out of Delaware’s Medicaid program was not made lightly. “Quite simply, we can’t continue to participate in a program that, in some cases, pays us less than our cost to fill these prescriptions,” Walgreens senior vice president of pharmacy Kermit Crawford says.
Delaware could eliminate its Medicaid pharmacy budget gap by focusing on its generic dispensing rate at all pharmacies in the state, he notes. Increasing its use of generics by 1% could save the state $1.2 million a year, Crawford says.
MORE ON DELAWARE MEDICAID Rx REIMBURSEMENT:
Walgreens offers to accept part of Delaware Medicaid Rx cut
Rx groups file suit against Delaware Medicaid cuts
Walgreens to exit Delaware Medicaid program