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Walgreens catches heat from Delaware lawmakers


NEW YORK Walgreens’ decision to back out of Delaware’s Medicaid program has some lawmakers in the state on the war path, with calls rising to the Governor’s mansion to end the state’s contract with Walgreens in Delaware’s state group health plan. According to a press release issued June 9 on behalf of Delaware’s House and Senate health committees, the state paid Walgreens $44.4 million in fiscal 2008 to fill prescriptions for 33,000 state employees through the program.

“The [Gov. Jack] Markell administration should look into the possibility of ending the state’s contractual agreement with Walgreens in the state group health program,” said Rep. Michael A. Barbieri, D-Newark, who chairs the state House Health and Human Development Committee. “Between state employees and Medicaid recipients, we send more than $60 million in business their way each year.”

The reaction comes less than a week since Walgreens announced it would stop filling Medicaid prescriptions in all of its 66 Happy Harry’s locations enrolled in Delaware Medicaid as of July 6.

“If that’s how Walgreens is going to do business in Delaware, then perhaps we as a state should not do business with them,” Barbieri said. The state’s current public employee health program does not stipulate which drug stores they must use to fill prescriptions, but that could change, he threatened.

“It’s unfortunate that a company is turning its back on our neediest citizens at a time when everyone in the state is feeling some kind of pain because of the recession,” added state Sen. Bethany Hall-Long, D-Glasgow. “Walgreens wasn’t a special case. We asked them to make the same sacrifice being asked of our other pharmaceutical providers — no more, no less.”

The bottom line, according to Walgreens spokesperson Tiffani Washington, is that the chain currently serves more than half of the state’s Medicaid business, and the proposed reimbursement reductions would cause Walgreens to lose money on every script it fills under the program. With the cuts, Delaware’s Medicaid pharmacy reimbursement ranks the second lowest in the country behind only Rhode Island. While Walgreens may have chosen to continue to participate in the Rhode Island Medicaid program, the chain’s exposure there was minimal, Washington told Drug Store News. By contrast, Walgreens only operates 20 stores in Rhode Island versus 62 in Delaware; Walgreens also participates in the Delaware Medicaid program through four border-state stores.

According to state officials, the proposed cuts would have saved Delaware $500,000 — a drop in the bucket compared to the savings Walgreens proposed it could help deliver the state through other alternative means, including, most notably, increasing generic utilization. For every one-percentage point improvement in the rate of generics filled, Walgreens could help the state save $1.2 million, Washington told Drug Store News.

With a current generic utilization rate of just 63%, Delaware ranks among the bottom 25% of states in the nation, in terms of the number of generic versus branded pharmaceuticals dispensed, Washington told Drug Store News. And that metric only stands to deteriorate further with Walgreens out of the program. According to its math, the state’s generic drug utilization rate climbs to approximately 69%, which likely would cost the state much more than the $500,000 it projected to save by cutting Walgreens’ reimbursement rate. In all, Delaware health officials had hoped to save $1 million through the rate cuts. Approximately 100 other pharmacies have agreed to remain in the Delaware Medicaid program, according to the state.

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