Walgreen Co. (WAG) said it had made significant concessions in
talks over the state of Delaware's planned reimbursement cuts and
warned the state's proposal would cause more significant
disruptions to Medicaid patients than the state expects.
"Cutting reimbursement rates to pharmacies isn't in the best
interests of patients, pharmacies or the state when that leads to
less access for patients and higher costs," said Walgreen senior
vice president Kermit Crawford.
The company added it previously agreed to accept nearly
two-thirds of the rate cut proposed by the state.
Walgreen said the state's current proposal would result in the
company losing money on 84% of the brand-name prescriptions it
fills for the Delaware Medicaid program.
Earlier this month, the nation's largest drugstore chain by
sales said new state rules involving Medicaid reimbursement that
are scheduled to become part of the state's new budget on July 1
would reduce the price it would pay for brand-name medications,
making it uneconomical for pharmacies to continue to fill the
prescriptions.
The state, meanwhile, responded by saying businesses needed to
help share in the burden of the recession. On Wednesday, Crawford
said Delaware was "attempting to place unfair budget burdens on the
backs of pharmacies."
"The state is turning a blind eye to the disruption its rate cut
will cause to those who are in most need of assistance," Crawford
added.
As a result of the planned changes, Walgreen said it would pull
all of its Happy Harry's pharmacies from the program as of July 6.
Walgreen, which acquired the Happy Harry's pharmacies in 2006, is
the largest pharmacy provider in Delaware.
The company maintained it believed the state would realize
savings by improving generic dispensing throughout its entire
pharmacy network.
For example, Walgreen said it fills 69% of Medicaid
prescriptions with generics, while all other pharmacies in the
state fill 63% with generics. It said that each percentage point
amounts to $1.2 million in potential savings, and said Delaware
could save more than $7 million a year by bringing other providers
up to Happy Harry's and Walgreen's level.
A representative for Delaware wasn't immediately available for
comment.
Shares of Walgreen were up 1% to $29.95 in recent trading.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com