June 4, 2009 / 7:59 PM / 9 years ago

UPDATE 1-Walgreen exiting Delaware Medicaid program

* Walgreen leaving Delaware’s Medicaid program in July

* Says Delaware reducing payments on brand name drugs

* Move follows similar step drugstore took in Washington

By Jessica Wohl

CHICAGO, June 4 (Reuters) - Walgreen Co WAG.N said on Thursday it would no longer fill Medicaid prescriptions at its Delaware pharmacies starting next month in protest against the state’s plan to slash reimbursements for drugs.

Walgreen argues that under a new reimbursement rule set to be part of the new fiscal budget starting in July, Delaware will cut the price it will pay for brand name medications, which would put pressure on pharmacies.

“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,” Kermit Crawford, the company’s senior vice president of pharmacy, said in a statement.

Walgreen said it would stop filling Medicaid prescriptions in all 66 of its Happy Harry’s locations as of July 6. Walgreen entered Delaware in 2006 when it bought the Happy Harry’s chain and said it is the largest pharmacy provider in the state.

Walgreen said that along with the National Association of Chain Drug Stores it suggested alternatives to the state that could help it fill its Medicaid budget gap. A spokesman for the Delaware’s department of health and social declined to immediately comment on Thursday afternoon.

Walgreen operates more pharmacies in Delaware than rivals Rite Aid Corp (RAD.N) and CVS Caremark Corp (CVS.N). Rite Aid said it has no plans to stop filling Medicaid prescriptions at it 42 stores in Delaware and CVS was not immediately available to comment.

Walgreen’s decision to stop filling Medicaid prescriptions in Delaware follows a similar move it took at almost half of its Washington state pharmacies. [ID:nN30536970]

Reporting by Jessica Wohl; Editing by Richard Chang

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