Walgreen Officials Say They Will Not Submit Financial Information to Massachusetts Officials

The Walgreen Co. drug store chain on Sept. 4 said it would not make detailed information on how much it pays for certain prescription drugs available to Massachusetts officials, the Boston Globe reports. Lawmakers have called for pharmacies in the state to disclose the information during hearings on a proposed Medicaid reimbursement cut (Reidy, Boston Globe, 9/4). Acting Gov. Jane Swift (R) in July approved the state budget, which included a reduction in Medicaid payments to pharmacies from 10% above the wholesale price to 2% below wholesale. The pharmacy payment cuts were expected to save the state about $60 million a year. In response, Walgreen, along with CVS and Brooks Pharmacy -- the state's three largest drugstore chains -- announced that they would discontinue their participation in the state's Medicaid program unless the state raised the reimbursement rate. Under a temporary agreement reached in August, the state will continue to reimburse pharmacies for Medicaid prescriptions at the current rate until Oct. 2, when it will establish a new rate. The agreement also requires pharmacies to give 30 days notice before exiting the state's Medicaid program. One independent Massachusetts pharmacy has provided state administrators with drug cost information requested at an August hearing on the state's Medicaid pharmacy reimbursement rate. Duval's Pharmacy in Whitman submitted invoices and other internal cost data documents that detailed what it paid for 25 drugs listed in the hearing notice. Pharmacies "have been reluctant to release what they consider proprietary information to the public and their competitors" (Kaiser Daily Health Policy Report, 8/29).

Dissenting Opinions
Walgreen spokesperson Michael Polzin said, "This issue isn't about what pharmacies pay for drugs. The real question is can a drugstore be profitable in a low-income area, and the answer is not if the state only wants to reimburse us for the cost of drugs and nothing more" (Heldt Powell, Boston Herald, 9/4). He added, "We operate in a competitive environment and disclosing costs would hurt our competitive advantage." CVS and Brooks have not said what cost information, if any, they will provide, according to the Globe (Boston Globe, 9/4). Robert Gittens, head of the state Executive Office of Health & Human Services, said, "I think it's outrageous for them to say our rates are unfair, but they won't provide the information to determine what a fair rate is." The Globe reports that federal and industry officials say Massachusetts' request for the data and intentions to post the information publicly are unprecedented. A spokesperson for the HHS Office of Inspector General told the Globe that federal officials consider pharmacy pricing information to be proprietary and "g[o] to great lengths" to protect the confidentiality of pharmacy data (Mohl, Boston Globe, 9/5).