DEERFIELD, IL – Citing reimbursement cuts in Washington's Medicaid program, Walgreens will withdraw 64 of its pharmacies from the state’s program as of Feb. 15.

The pharmacies represent 75 percent of Walgreens’ total Medicaid business in the state. The Deerfield, Ill.-based company operates 121 pharmacies throughout Washington.

The most recent payment reduction is due to a Massachusetts court ruling last fall that lowered the industry pricing standard, even though pharmacies’ acquisition costs haven’t changed.

While many private insurance providers have adjusted pharmacy reimbursement rates to limit the impact of the court ruling, Washington’s Medicaid program has yet to do so. Walgreens officials say that has led to significantly lower payments to pharmacies that severely impact the economic viability of doing business in the state.

According to Walgreens officials, Washington's Medicaid program is reimbursing the company below its break even cost on nearly 95 percent of brand-name medications.

“We have thousands of loyal patients who appreciate and trust our pharmacists, and we are absolutely committed to patient care,” said Kermit Crawford, Walgreens' senior vice president of pharmacy. “That’s why we are working diligently with the state on ways to lower its spending on prescription drugs while ensuring patients have access to the full benefit of their drug therapy.”

In the past year, Washington’s pharmacy community has identified tens of millions of dollars in savings to the state through more effective medication management. If implemented, officials say, these savings would more than offset the lower payments that pharmacies are now receiving.

The reductions in pharmacy payments offer short-term savings, but could have a negative effect on long-term costs and Medicaid patient health. Studies show that medications are effective at lowering overall costs by keeping people healthy and preventing expensive hospital procedures, while comprising only about 10 percent of overall healthcare costs.

If pharmacies are forced out of the Medicaid program due to these payment reductions, it's likely that other healthcare costs will increase, officials said.

“Now is the time, with the legislature back in session, to fix the state’s pharmacy reimbursement rates,” Crawford said.