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Walgreens takes a stand in Washington

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DEERFIELD, Ill. — Walgreen Co. has warned that it intends to withdraw more than half of its pharmacies in Washington from the state’s Medicaid program on February 15, in response to reimbursement cutbacks.

Walgreens, which operates 121 pharmacies in Washington, intends to withdraw 64 of its pharmacies from the state’s Medicaid program. The company says these pharmacies represent 75% of the company’s total Medicaid business in the state.

This announcement came one week after Seattle-area chain Bartell Drugs said it would stop filling Medicaid prescriptions at 15 of its 57 stores due to the reimbursement issue.

Walgreens officials note that the most recent payment reduction results from a Massachusetts court ruling last fall that reduced the industry pricing standard, even though pharmacies’ acquisition costs haven’t changed.

While many private insurers have adjusted pharmacy reimbursement rates to limit the impact of the court ruling, Washington’s Medicaid program has yet to do so. That has led to significantly lower payments to pharmacies, which severely impacts the economic viability of doing business in the state. Similar situations exist in California and New York.

Last fall, the National Association of Chain Drug Stores filed lawsuits against the three states, contending that the cuts in Medicaid reimbursement rates are “unlawful.” NACDS and other pharmacy groups just days later took part in a similar legal action against Minnesota.

In Washington state, Walgreens contends that the most recent payment reduction means that the chain is reimbursed at below its break-even cost on nearly 95% of brand name medications.

“Walgreens is committed to providing cost-effective pharmacy services across the state,” says Walgreens senior vice president of pharmacy Kermit Crawford. “We have thousands of loyal patients who appreciate and trust our pharmacists, and we are absolutely committed to patient care. 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 argues that while reductions in pharmacy payments may save the state some money in the short term, it could prove costly in the long run, because medications can keep people healthy and help them avoid the need for expensive hospital procedures.

“Now is the time, with the legislature back in session, to fix the state’s pharmacy reimbursement rates,” Crawford said. “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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