Walgreens to stop filling Medicaid prescriptions

Walgreens, the state’s largest pharmacy provider, might have gotten less than it bargained for - about $45 million dollars less - after the company decided in June to stop filling Medicaid prescriptions.

State legislators are riled over the company’s decision, saying the pharmacy is leaving Delaware in a temporary lurch. Lawmakers are now considering dropping Walgreens from supplying prescriptions to the state’s 33,000 workers.

But the Medicaid showdown has also delivered Gov. Jack Markell his first legal battle as head of state. The National Association of Chain Drug Stores and the National Community Pharmacists Association filed a motion for preliminary injunction Thursday, June 11, asking the District Court to stop the state’s reimbursement cuts. They say the governor and the state health department violated federal laws because they ignored the negative impacts the cuts would have on patient care.

Negotiations broke down between the state and Walgreens after the new Medicaid reimbursement rule took effect April 1.

Walgreens announced June 4 that it will no longer fill prescriptions after July 6 at the state’s 66 Happy Harry’s drug stores - potentially affecting 160,000 Delaware Medicaid recipients.

In the meantime, legislators have launched a public relations campaign to educate Medicaid clients on how to get their prescriptions filled elsewhere. They also say they will use federal dollars to provide transportation for Medicaid recipients to get to other pharmacies.

Walgreens executives say Delaware is arbitrarily and unilaterally reducing the price it will pay for brand-name prescriptions.

Walgreens officials insist the state is low-balling the company and refuse to accept “extreme reimbursement cuts” in the state’s Medicaid program designed to save the state money.

Medicaid makes up about 16 percent of the state’s operating budget, and as Delaware faces an $800 million budget gap, legislators have been combing through contracts in an effort to save money.

Lawmakers say they tried to negotiate contracts with Walgreens. The reduced rate Walgreens refused would have saved the state $500,000, say lawmakers, who say Walgreens would have still collected $18 million for filling prescriptions.

“Between state employees and Medicaid recipients, we send more than $60 million in business their way each year for prescriptions, while they posted $2.2 billion in net income last year,” said House Health and Human Development Committee Chairman Rep. Michael Barbieri, D-Newark.

In 2008, Delaware paid Walgreens $44.4 million for prescriptions on behalf of state employees, who have the choice of filling their prescriptions at the chain - but maybe not for long.

“If that’s how Walgreens is going to do business in Delaware, then perhaps we as a state should not do business with them,” said Barbieri.

Tiffany Washington, a Walgreens spokeswoman, said, “There was a cut across the board that would leave us filling - in some cases - prescriptions for less than our cost to fill them.”

As for the state’s consideration of ending its state-worker prescription plan with Walgreens, she said, “We’re surprised the state would consider a move that would limit access to pharmacy services for its employees.”

Washington said every time states review their budgets, legislators often renegotiate contracts as they examine fund renewals and potential savings.

“Delaware would be the first Medicaid plan - if we don’t reach a resolution by July 6 - that would actually be dropping out,” she said.

Transition to other pharmacies
House health committee members held a joint press conference Tuesday, June 9, with Department of Health and Social Services (DHSS) Secretary Rita Landgraf to discuss the recent decision and the process of switching to other pharmacies.

Barbieri, who said he did not take part in negotiations, called Walgreens’ move unconscionable and said the company provided the state with a weak counter-proposal. When asked if the state was acting arbitrarily in negotiations, he said, “If it was arbitrary, why would other pharmacies jump in?”

Medicaid consumers can use Rite Aid, CVS, Kmart and dozens of other pharmacies.

Still, Barbieri said, “I do believe there will be a little blip.”

Landgraf said health officials are mapping out the state, sending letters to Medicaid recipients and making plans to use alternate pharmacies.

Kermit Crawford, Walgreens senior vice president of the pharmacy, said, “We understand that Delaware is having difficulties balancing its budget, but we urge the governor and his staff to reconsider this action and implement some of the very achievable cost-saving measures that we have suggested.”

Negotiations: off the table
When asked if Delaware lawmakers are negotiating with Walgreens, Washington said, “At this point, that’s something you might have to get from the state.”

She added, “We do hope that we can reach a resolution with the state, that they will reconsider the alternative we have presented that will allow them to realize the savings - and more than the savings they’re looking for - while protecting access to pharmacy services.”

Joe Rogalsky, the governor’s communications director, said, “There are no negotiations with Walgreens. The governor believes that Walgreens’ telling tens of thousands of Delawareans that the pharmacy is no longer going to fill their prescriptions is not an acceptable negotiating tactic. When Walgreens sent out a press release announcing their decision, that was their decision.”

Rogalsky said the state health department has begun spending time and resources explaining the change to Medicaid clients and helping them find new pharmacies.

“The administration is not inclined to give them back the business because then DHSS would have to go back to all of its clients again and say ‘never mind.’ Our clients should not be treated like that,” he said.

For more information visit: dhss.delaware.gov/dhss/

Associations file lawsuit over Medicaid cuts

The National Association of Chain Drug Stores and National Community Pharmacists Association have jointly filed, on Thursday, June 11, a lawsuit against Gov. Jack Markell, Department of Health and Social Services Secretary Rita Landgraf and the state health department.

The pharmacy groups charge state officials with violating federal laws by ignoring the negative impact Medicaid reimbursement cuts will have on patient access to quality care. They also allege officials failed to comply with Delaware’s Administrative Procedures Act when the state cut the rates in April.

“During these challenging economic times, Medicaid patients should not be on the losing end of the state’s attempt to reconcile their budget,” said National Association of Chain Drug Stores President and CEO Steven C. Anderson. “Medicaid is designed to provide healthcare to financially disadvantaged patients who couldn’t otherwise afford these valuable services. As pharmacists and critical healthcare providers, we take this responsibility seriously, which is why we needed to intervene to ensure we can continue serving our patients.”

Markell said the suit does not intimidate state officials. “Walgreens didn’t like the change to the reimbursement, so we met with company representatives repeatedly and proposed reasonable compromises,” Markell said. “But rather than work together, Walgreens decided to cut off discussions, drop out of the Medicaid program and stop serving tens of thousands of Delawareans in this time of need.”

The governor added, “Now their trade association has sued the state. If these are negotiating tactics, they are not good ones. We are always open to conversation, but we will not be bullied, especially when we are asking so many individuals and organizations in Delaware to share in the sacrifices necessary to close an $800 million budget gap.”

Medicaid clients have options at other pharmacies
As part of the solution to Delaware’s historic $800 million budget shortfall, the Department of Health and Social Services reduced the rate it pays pharmacies for medication sold for Medicaid recipients, saving the state about $1 million. Reducing the rate allowed the state to avoid cutting Medicaid benefits or removing residents from the program, according to Drew Volturo, House of Representatives spokesman.

Pharmacy chains such as Rite-Aid, CVS and pharmacies located in stores including Shop Rite, Acme, Pathmark, Super G, Wal-Mart and Target agreed to the rate cut, as did several independently owned pharmacies throughout the state.

Department Secretary Rita Landgraf said Medicaid clients can take their prescription bottles into participating pharmacies to have their prescriptions filled. The state will also provide transportation to those in need. For more information, call 1-800-996-9969, Option 2. Para ayuda en español, llame al 1-800-996-9969.