PHARMACY

Walgreens to quit serving Medicaid in 44 drug stores in Washington State

BY Jim Frederick

DEERFIELD, Ill. With negotiations between retail pharmacy leaders and the state of Washington at an impasse over the state’s refusal to reconsider a deep cut to its Medicaid prescription reimbursements, Walgreens has thrown down the gauntlet. The chain announced Monday it would withdraw 44 of its pharmacies from the state’s Medicaid program as of May 1.

Walgreens operates 111 pharmacies throughout Washington, but the 44 pharmacies in question represent more than 60% of its total Medicaid business in the state, the company said.

Under new Medicaid reimbursement rules set to take effect April 1, Washington will significantly reduce the price it will pay for brand name medications. Those cuts, Walgreens announced Monday, will have the effect of “severely impacting the economic viability of doing business in Washington.”

Concern over the Medicaid payments to pharmacies erupted Friday, March 27, when the National Association of Chain Drug Stores and the Washington State Pharmacy Association warned in a joint statement that the payment cuts could force 72 pharmacies “to choose between losing money to provide medications and services to their patients on Medicaid, and closing their doors.” Adding insult to injury, the cutbacks come as the state prepares for a $1.8 billion infusion of economic stimulus money from the federal government for its Medicaid program.

Kermit Crawford, Walgreens’ senior VP of pharmacy, explained the company’s move.

“We have made the decision to stop filling Medicaid prescriptions in these pharmacies after long and careful deliberations,” he said. “Walgreens is the market leader in Washington and provides cost-effective pharmacy service across the state,” Crawford said. “We have thousands of loyal patients who appreciate and trust our pharmacists and we are absolutely committed to patient care.”

Echoing other pharmacy leaders, Crawford urged state lawmakers to reconsider the cutbacks, adding that Washington could fill its Medicaid budget gap in other ways.

“As an example, independent and chain pharmacies have identified as much as $90 million in potential savings through more effective medication management,” he said. “These are sound alternatives to payment cuts to pharmacies.”

By limiting access to pharmacies with its payment cuts, Crawford said, the state runs the risk of driving up other health care costs – costs that represent the majority of health expenditures.

“We urge all elected and appointed officials to reconsider this action and implement other cost savings measures that we and others have suggested that would enhance patient care, rather than harm it,” he said. “The state of Washington now has the worst payment rate in the country for brand name medications and one of the lowest rates among state Medicaid program for generic medications. We can’t operate as usual under that situation.”

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PHARMACY

MSI delivers specialized services, purchasing power

BY Alaric DeArment

Medicine Shoppe International
General Manager: Terry Burnside
Corp. Offices: St. Louis
Number of Members/Stores: 790
Web page: www.medicineshoppe.com

In its 41-year history, Medicine Shoppe International has become one of the most widespread names in the retail pharmacy business, with franchises as far away as Taiwan, India and the Middle East.

But despite its heft at 800 Medicine Shoppe and Medicap Pharmacy stores, The Medicine Shoppe’s model differs significantly from that of traditional retail pharmacy chains. When pharmacist Michael Busch opened the first store in St. Louis in 1968, he envisioned a franchising system whereby pharmacists run the business rather than vice versa. And today, 40 years later, the Medicine Shoppe model has evolved to differ significantly from even Busch’s original vision. In fact, there is no one, set Medicine Shoppe model since the company began rolling out its specialized care center concept in recent years.

In April 2008, Medicine Shoppe opened its 100th Specialized Care Center for patients with diabetes, also called SCC-Diabetes, where diabetes patients receive education and counseling from pharmacists with certification as diabetes managers.

In October, MSI announced that Medicine Shoppe and Medicap Pharmacy stores would offer year-round immunizations for flu, pneumonia, shingles and some seasonal and travel vaccines through its Specialized Care Centers for immunizations, located in 350 of its stores.

The wide range of services earned MSI the highest ranking in J.D. Powers and Associates’ 2008 study of retail chain pharmacy customer satisfaction for the second year in a row.

“Our pharmacies excel in providing excellent service and knowledgeable consultation,” an MSI spokeswoman said.

The company would not divulge sales data, but the spokeswoman said the focus of its growth is on growing existing pharmacies.

Despite a string of store closures in recent years resulting from store operators not renewing their franchises, she said there had “not really” been any closures lately, but that growth had not come only from the United States.

“Most of our growth has come from our international stores,” she said.

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PBA Health’s operating and marketing efficiency leads to overall growth

BY Bruce Kneeland

PBA Health (DBA TrueCare Pharmacies)
CEO: Nick Smock
Corp. Offices: Kansas City, Mo.
Number of Members: 1,800
Web page: www.pbahealth.com

Since 2006 PBA Health has grown from slightly more than 1,000 members to 1,800, making it the fastest-growing major pharmacy group, according to Nick Smock, CEO of the Kansas City, Mo.-based cooperative. One of the things that made this growth possible is the organization’s realization that, while buying “right” will always be a key element of success for any pharmacy, two other areas are just as important: operational excellence and effective marketing.

On the buy side, PBA Health operates a distribution center and is a voting member of HDMA, the trade organization owned by the nation’s full-line wholesalers. The PBA Health warehouse ships pharmaceuticals, OTC, seasonal and opportunity buys. PBA Health also contracts with three wholesalers, allowing its members to choose the wholesaler they prefer. The group’s annual trade show — held this year in Overland Park, Kan., from Aug. 14 to 16 — provides members with the ability to meet with more than 40 companies that provide special prices, discounts and rebates.

On the operations side, PBA Health works closely with two pharmacy management system companies, two IVR companies, a credit card processing firm and a robotics vendor. While members can use any technology vendor they choose, the group can negotiate better pricing and work closely with vendors on software features that drive proprietary management and marking programs, by working with a small number of companies, according to Smock.

Among the key programs PBA Health offers are TriNet, a third party network; Ensure Pay, an electronic claims central pay and reconciliation service; an in-house PBM; and ScriptCard, a cash card program that helps members market themselves to the uninsured or underinsured. ScriptCard+ supports a flat-fee generic program.

PBA Health is aggressive in third-party reimbursement, government relations and regulatory affairs. Dale Smith, a well-known fixture in several state capitals, heads up these initiatives at PBA Health. The group expends considerable effort to keep abreast of issues at the state and federal level, and shares this information in a compelling and organized manner with its members, Smock said. It also calls upon members to contact elected and appointed government officials in an effort to effect change that will best serve independent pharmacies and the patients they serve.

Many of the group’s 80 employees are involved in operating the warehouse and staffing a customer call center. PBA Health also has a team of advertising and marketing people that do market research for stores, design logos and even develop customized ad materials. The organization supports DBA True Care Pharmacies, a program that provides overall support for members and provides interior and exterior signage, POP materials and even has an impressive private-label program.

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