• Cautions state that service disruptions may be significant without Happy Harry’s/Walgreens in Medicaid network
• Company offers to help Delaware improve generic drug dispensing throughout pharmacy network to solve Medicaid prescription budget

Walgreens (NYSE:WAG)(NASDAQ: WAG) today said it has gone more than halfway in negotiations with the State of Delaware over new Medicaid pharmacy rates by previously agreeing to accept nearly two-thirds of the rate cut proposed by the state. The company also is cautioning Medicaid patients that service disruptions at all Delaware pharmacies – resulting from the state’s proposed rate cut – will be more significant than the state anticipates. Half of the state’s Medicaid prescriptions are filled by Happy Harry’s, A Walgreens Pharmacy.

Walgreens also believes it can help the State of Delaware reach the Medicaid prescription savings it needs by improving generic dispensing throughout the state’s entire pharmacy network.

“As we fight for a minimally fair rate that preserves jobs and allows us to continue serving our Medicaid patients, the state is turning a blind eye to the disruption its rate cut will cause to those who are in most need of assistance,” said Kermit Crawford, Walgreens senior vice president of pharmacy.

The state’s current proposal would result in Happy Harry’s/Walgreens losing money on 84 percent of the brand name prescriptions it fills for the Delaware Medicaid program. “The prospect of filling those prescriptions at a loss put us in a difficult position,” Crawford said.

“Staying in the program meant we couldn’t provide the level of service these patients deserve. So we’re forced by the state to withdraw from Medicaid as of July 6 and refer those patients to other pharmacies where patients may find it difficult getting timely service.”

“Cutting reimbursement rates to pharmacies isn’t in the best interests of patients, pharmacies or the state when that leads to less access for patients and higher costs,” said Crawford. “We’ve proposed many other alternatives that will save the state much more than a harmful rate cut. But despite those proposals, we’ve offered as part of our good faith negotiations to accept nearly two-thirds of the rate cut proposed by the state.