On the heels of Walgreens announcing its plan to withdraw from Delaware’s Medicaid program due to reimbursement cuts, a pair of national pharmacy groups is suing state officials.

The National Association of Chain Drug Stores and National Community Pharmacists Association have jointly filed suit in U.S. District Court in Delaware, challenging Delaware’s rate cuts for Medicaid reimbursement for brand name drugs. The groups claim the cuts result in reimbursements for many drugs at a level below a pharmacy’s break-even costs.

To help alleviate a state budget shortfall, Delaware’s Department of Health and Social Services reduced the rate to save an additional $1 million spent on pharmacy reimbursements.  The state agency said the reduction was one of the ways it can avoid proposing cuts to either Medicaid benefits or ending the program altogether.

Beginning in April, representatives from the two national groups were meeting with Gov. Jack Markell, and the DHSS to reach a compromise, but talks broke off in June, according to a press release by the NACDS and NCPA.

The suit asks the court to put a stop to the cuts while a judge considers the merits of the suit, against Markell, the state’s DHSS secretary, Rita Landgraf, and her department.

It claims the state violated federal law by ignoring the negative impact that the reimbursement reductions will have on patient access to quality care, according to the two pharmacy groups. The suit also maintains the state is in violation of its own Administrative Procedures Act in enacting the rate cut.

NCPA and Alexandria, Va.-based NACDS estimate that the cuts would result in an average reduction of $3.63 in pharmacy reimbursement for brand-name prescription drugs. That reimbursement, they claim, is lower than the average pharmacy’s breakeven cost for more than 76% of all brand name prescription drugs, resulting in an average loss of $3.84 per prescription.

Steven C. Anderson

NACDS President and CEO Steven C. Anderson said patient access to pharmacy services “will be in jeopardy” due to Delaware’s actions.

“During these challenging economic times, Medicaid patients should not be on the losing end of the state’s attempt to reconcile their budget,” Anderson said in a statement. “If pharmacies are reimbursed at a loss, the patients also lose; and that loss can result in patients not receiving their medications and other health services from their neighborhood pharmacy so they can maintain their health and that of their families.”

Deerfield, Ill.-based Walgreen Co. announced that it will stop filling Medicaid prescriptions in all of its 66 Happy Harry’s company pharmacies as of July 6, citing the state’s “new and extreme reimbursements,” according to a statement by the company.