June 11, 2009

Markell Responds to Lawsuit from Walgreens’ Trade Association

Illinois-based company turned its back on Delaware’s neediest population last week

DOVER – Gov. Jack Markell said Thursday that the lawsuit filed against him, the Department of Health and Social Services, and DHSS Secretary Rita Landgraf by the National Association of Chain Drug Stores and another trade group will not intimidate the Administration into paying Walgreens higher State Medicaid reimbursement rates.

State officials were not notified of the lawsuit before it was filed in U.S. District Court in Wilmington. The suit seeks to prevent the state from achieving savings from its recent changes to Medicaid pharmacy reimbursements. The changes are part of the Markell Administration’s plan to responsibly address the state’s historic $800 million budget shortfall while preserving essential government services such as access to Medicaid.

Instead of helping the state solve the budget challenge, Illinois-based Walgreens abruptly announced last week it was leaving the Medicaid program effective July 6 because of the reduced rates. Walgreens is the only member of the National Association of Chain Drug Stores that has withdrawn from Delaware's Medicaid program.  Other major pharmacies – like Rite-Aid, Shop Rite, Acme, Pathmark, Walmart, Super G and Target – and independently owned pharmacies throughout Delaware remain in the Medicaid program and continue to serve Delaware's Medicaid population.

“Walgreens didn't like the change to the reimbursement, so we met with company representative 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.”

“Now their trade association has sued the state,” Markell said. “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.”

“We gave careful consideration to the change in reimbursement before it went into effect,” said DHSS Secretary Rita Landgraf.  “We are confident that we made the right decision for Delaware, especially in light of the state's fiscal challenges. Delaware's Medicaid population has ample access to pharmacy services across the State from other pharmacies.  We are disappointed that Walgreens will not serve Delawareans on the same terms that are acceptable to its competitors.”