Walgreens to Stop Filling Medicaid Prescriptions at Nearly Half of Its Pharmacies in the State of Washington as of May 1

DEERFIELD, Ill., Mar 30, 2009 (BUSINESS WIRE) ----Walgreens (NYSE:WAG)(NASDAQ:WAG):

-- Takes Action as a Result of Extreme State Medicaid Reimbursement Cuts

-- 44 Pharmacies Most Affected to Withdraw from Program

As a result of extreme reimbursement cuts in the State of Washington Medicaid program, Walgreens (NYSE:WAG)(NASDAQ:WAG) today announced it will withdraw 44 of its pharmacies from the state's Medicaid program as of May 1. These 44 pharmacies represent more than 60 percent of the company's total Medicaid business in the state and are found in communities large and small. Walgreens operates 111 pharmacies throughout Washington.

Under a new Medicaid reimbursement rule set to take effect on April 1, the State of Washington will significantly reduce the price it will pay for brand name medications, severely impacting the economic viability of doing business in Washington.

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

"The fact remains that the state could fill its Medicaid budget gap in a number of other ways. As an example, independent and chain pharmacies have identified as much as $90 million in potential savings through more effective medication management. These are sound alternatives to payment cuts to pharmacies."

As the market leader in Washington, Walgreens has a strong track record of efficiently and effectively delivering pharmacy services.

"Walgreens performs significantly better than the average pharmacy in Washington to save the state money by filling prescriptions with generics as much as possible," said Crawford. "Today, we fill 77 percent of state Medicaid prescriptions with generics, much higher than the state average of 63 percent. Bringing the state's average up to Walgreens level could, by itself, provide the Medicaid program with the savings it's looking for."

These pharmacy payment cuts could have a negative effect on Medicaid recipients. Studies show that medications are effective at lowering overall health costs by keeping people healthy and preventing expensive hospital procedures, while comprising only about 10 percent of overall health care costs. By limiting access to pharmacies, it is likely that the state payment cuts will drive up other health care costs that represent the majority of health expenditures.

Crawford said, "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. 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 programs for generic medications. We can't operate as usual under that situation."

Walgreens (www.walgreens.com) is the nation's largest drugstore chain with fiscal 2008 sales of $59 billion. The company operates 6,679 drugstores in 49 states, the District of Columbia and Puerto Rico. Walgreens provides the most convenient access to consumer goods and services and cost-effective pharmacy, health and wellness services in America through its retail drugstores, Walgreens Health Services division and Walgreens Health and Wellness division. Walgreens Health Services assists pharmacy patients and prescription drug and medical plans through Walgreens Health Initiatives Inc. (a pharmacy benefit manager), Walgreens Mail Service Inc., Walgreens Home Care Inc., Walgreens Specialty Pharmacy LLC and SeniorMed LLC (a pharmacy provider to long-term care facilities). Walgreens Health and Wellness division includes Take Care Health Systems, the largest and most comprehensive manager of worksite health and wellness centers and in-store convenient care clinics, with more than 700 locations throughout the country.

SOURCE: Walgreens