California to keep paying Walgreens, despite Newsom’s threat

April 10, 2023

By JOSH FRIEDMAN

California will continue paying money, likely billions of dollars, to the pharmacy chain Walgreens, despite Gov. Gavin Newsom announcing in a tweet last month that the state would no longer do business with the company. [Market Watch]

Last month, Walgreens indicated it would not distribute abortion pills in conservative states where doing so could possibly constitute breaking the law. On March 6, Newsom responded to the move in a tweet saying California would cut business ties with Walgreens.

“California won’t be doing business with Walgreens — or any company that cowers to the extremists and puts women’s lives at risk” Newsom stated in the tweet. “We’re done.”

The governor then ordered his administration not to renew a $54 million contract with Walgreens to provide prescription medication to California’s prison system. 

However, Walgreens has significant financial ties with California’s Medicaid program that the sate cannot sever easily. Federal law states Medicaid patients have the right to fill prescriptions from any willing and qualified provider, which includes Walgreens.

Last year, California’s Medicaid program paid Walgreens more than $1.5 billion. 

Tony Cava, the spokesman for the California Department of Health Care Services, said the state has no intention of taking any action that would violate federal Medicaid requirements or that could undermine medication access for low-income individuals. 

Anthony York, Newsom’s spokesman, said tweeting is not policy.

The Newsom administration also invited Walgreens to apply again in the future for the $54 million contract that California chose not to renew last month.