Walgreens Drops Medicaid
Jun 5th, 2009 by thatsElbert
Walgreens Pharmacies in Delaware won’t be taking Medicaid after July 6 unless some agreement with the state. New rules which took effect on April 1st reduce the amount of money the state will pay for brand name prescriptions. According to this WBOC story, Walgreens states that “Delaware now has one of the lowest payment rates in the country for brand name and generic medications.” Further WBOC reports:
Kermit Crawford, Walgreens senior vice president of pharmacy, said, “We have made the decision, after much thought and care, to end our involvement with the state Medicaid program. 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. By making it uneconomical for pharmacies to continue filling Medicaid prescriptions, the state’s new payments to pharmacies hurt the very patients that Medicaid is meant to serve.”
In this Wall Street Journal article, Secretary of the Department of Health and Social Services Rita Landgraf stated:
“We need our business partners to help share in the sacrifice that these difficult times require.”
If this is a view of how socialized medicine will treat private business, it will certainly drive businesses away from health care or force them to stop carrying certain prescription drugs due to their lack of profit. Who in their right mind would sell something on a regular basis that will cost them money?
Walgreens must watch their bottom line. The company will “share in the sacrifice” by writing their checks for Delaware taxes. If you think it’s evil for business to show a profit on medicine, then this is probably a great sin on Walgreens part. I really don’t blame Walgreens for their actions.
(cross-posted on That’s Elbert With An “E”)
That is the stupidest thing I have heard from the administration. They are already paying taxes which are going up as part of the sacrifice. Why should they give away their product and sacrifice more than anyone else. They don’t work for the state. They have no obligation to play games.
I blame the administration for trying to balance its budget on the health of the poor. Shame on it. What we need is a comprehensive Medicaid reform modeled upon what is already saving money in Florida and other places.
Your characterization of the lowered payments as socialism reminds me of an old joike:
Diner: “This food tastes like poison!
Other diner: “Yes, and such small portions too.”
Correction: I titled the article wrong. Walgreens is dumping “Medicaid” not “Medicare”. I made the correction and apologize deeply.
noman:
I was pointing to this as a possible situation (“if”).
If I’m selling product A for $20.00 but I’m charging you $15.00, I won’t be in business long. That appears to be the situation in this case.
If I’m selling product A for $20.00 but I’m charging you $15.00
Then maybe you need to get back to your supplier and pressure them to sell you the product for $13.
In this new era, corporations need to learn how to live with ordinary profits instead of insisting on obscene killings every time out.
Or whatever profits the government says you can have.
Come again? The state isn’t dictating profit. It is a customer choosing the lowest cost provider. That is the free market in operation. Profit is the responsibility of the business, based on what their customers are willing to pay.
Other pharmacies will fill the void and accept the Medicaid money Walgreens thinks it is too good for. It is an opportunity for other pharmacies to expand their market share.
By the way, I don’t believe for a minute that the Medicaid reimbursements are below the actual cost. I’d have to see that to believe it.
I find it noteworthy that Rite Aide is continuing to support the DE Medicaid program, as noted by Alan Levin, who sold his Happy Harry’s to Walgreen’s.
David, I find your take on this to be outrageous.
Why shouldn’t we expect corporations and businesses to give back to their communities in times of need, within limits of course?
Is there any evidence that Walgreen’s attempted to negotiate with the state?
Your knee-jerk ideological response is not impressive, David!
Why shouldn’t we expect corporations and businesses to give back to their communities in times of need, within limits of course?
I actually find it offensive to call accepting the cuts a charitable give back. It is a business negotiation, not a charity. Walgreens can take it or leave it.
We’ll see how this plays out, but right now, I am thinking it’s a strong-arm negotiation ploy.
On one hand, I do not agree that it’s right or expected as a part of business for the business to be forced into taking a loss because they are told to do so, or it’s “the right thing to do.” That’s pure bunk and self-righteous to hold that kind of opinion.
On the other hand, this part of the prescription biz is a known quantity and a negotiation struggle that has existed for years. While the arrangement sucks, the feigned outrage and shock is highly disengenous. I do think Walgreen has a right to protect it’s right to not be forced into taking a loss. I also think, though, that Walgreen should stop being somewhat of a sanctimonious ass in the public eye (no idea how closed-door negotiations really have gone) and maybe look and see why other pharmacies are going along with it. Either they are the industry martyr here (I say that loosely), or they are so stuck up their own ass that they missed something all the others didn’t.
Oh, on a personal opinion, I would say that Walgreen is very much stuck up their own ass. My experiences with them are HORRIBLE. I also hate how they took what was a nice environment with Happy Harry’s and turned it into as much of a General Merchandise flea market feel that they could with limited space. Happy Harry’s was always the reason I would NEVER go to Rite Aid (or CVS when I lived near one of those). Given the almost-equal-footing, I now go to Rite Aid, whose stores (the newer locations) are far more enticing and less jammed with junk than Walgreen.
Don’t forget the chains are in bed with the insurance companies, who won’t pay for more than 30 days supply at a time, to make sure you have to wend your way through the flea market at least once per month.
Mail order, direct purchases, and negotiated bulk discounts have huge potential for taxpayer savings.
I agree with Noman. That’s scary. They can take it or leave it. Unless or until we get universal government health insurance. I would hope that the state would realize that saving a million dollars at this price is not worth the impact on the poor and local businesses. They should split the difference. The state already lowered the reimbursement to 86% of wholesale (as I understand it). Now they want to lower it to 84%. For some name brand drugs which do not have competition, that becomes a money loser.
Apparently, the people at Walgreens are not willing to lose money. I think it is as much fear that if they accept it here, it will cascade across America. Then working people in Walgreens would pay the price with fewer hours. That is the real world impact. WalMart apparently will benefit more from all of the business that will come to it. While people wait to get their prescriptions, they often shop to make use of the trip. Foodstamps, EBT cash, check cashing, and normal spending will flow to WalMart. The money lost is small as they will make a profit on the vast majority of medications.
The market will take care of it, but the state needs to realize there is a breaking point. Sooner or later there will only be a couple vendors accepting medicaid if they keep this trend. Then the locus of power will shift to those vendors. The state will no longer control the terms. Is that where we wish to go? We are only talking about saving 1M and half of that goes to Walgreens which takes in 18.5 million and would take in 18 million under the deal as I understand it.
I agree with Smitty, it is a negotiating ploy and Walgreens isn’t bluffing. It is nice, though, to see the Markell Administration get a taste of its own medicine.
Mail order, direct purchases, and negotiated bulk discounts have huge potential for taxpayer savings.
I started utilizing my mail-order Rx through my provider once I realized what a massive pain-in-the-a$$ Walgreens was. Best choice ever in that regard. I use Rite-Aid when I need an Rx “now” or for the certain few that you can’t use mail-order.
It is nice, though, to see the Markell Administration get a taste of its own medicine.
…at an 84% rate (I think that’s the proposed rate).
“If I’m selling product A for $20.00 but I’m charging you $15.00, I won’t be in business long.”
What an archaic perspective. All you have to do is print more currency, and charge it to the grandkids. Wake-up!
“I actually find it offensive to call accepting the cuts a charitable give back. It is a business negotiation, not a charity. Walgreens can take it or leave it.”
I didn’t call it a “charitable give back”, those are your words, noman, twisting mine. And I did add: “within limits”, which you ignored.
Walgreens has yet to demonstrate, or even claim that participation in DE Medicaid would cause them to suffer a net loss. I don’t believe they would, based on Rite Aide and others.
Apparently Rite Aide and others have found a way to live with the cuts. Why can’t Walgreens?
Smitty is probably right, this is Walgreens attempt to negotiate, using a public threat to quit the program. So be it then. I expect them to eventually rejoin, otherwise lose corollary business.
However, in tough times like these, I don’t think it is asking too much to expect Walgreens, and others, to give a little.
Perry: from the WBOC article:
I realize this is probably more of the “he said/she said” talk. Regardless, it would seem like the state could give a little too, or is that too much to ask?
RSmitty, I’ve had mixed service with our local Walgreens/Happy Harry’s. My experience might be better due to knowing some of the pharmacy staff. I’ve had a bad run with Rite Aid before. When they bought Edgehill Pharmacy, the service my family received there tanked. The pharmacist we knew at Edgehill went to Happy Harry’s so we followed her. We’ve been customers since.
Walgreens sucks! I used to love shopping at Happy Harry’s. How could you not love a store where you could purchase everything from As Seen on TV items to Depends Undergarments to ice cream. Now whenever I stop in, whatever it is I’m looking for they don’t have it. Never! The selection is horrible. I miss Harry’s! Damn that Levin!
Actually, my local Walgreens has a pretty nice selection of electronic accessories, things like voltage adapters, RF trasmitters for connecting your MP3 player to your car radio, all sorts of cool stuff like you might find in an Asian-owned dry goods store. And usually some toys on special for the kids, and occasional deep discounts on applicances.
I appreciate it, but not enough to keep shopping there if they drop the Medicaid prescriptions.
Does Walgreen’s still sell Popiel’s ‘Pee n’ Pants,’ with the ‘Adjustable Penal Tube’ and the ‘Ankle Reservoir’- for long-distance car trips?
“And that’s not all- order your ‘Pee n’ Pants’ today, and we’ll include, free of charge, S#!t Britches’….yes, with ‘S#!t Britches’…”