California to keep paying Walgreens despite abortion dispute

SACRAMENTO, Calif. - California’s Medicaid program will continue to pay Walgreens about $1.5 billion each year despite Democratic Gov. Gavin Newsom declaring last month the state was done doing business with the pharmacy giant after it indicated it would not sell abortion pills by mail in some states.

"California won’t be doing business with @Walgreens -- or any company that cowers to the extremists and puts women’s lives at risk. We’re done," Newsom tweeted March 6.

He then ordered his administration not to renew a $54 million contract with the company to provide prescription medication to the state’s prison system.

But cutting ties with Walgreens wasn’t as clear cut as the governor first indicated. Walgreens has a much more lucrative connection to California’s Medicaid program — the joint federal and state health insurance program for people who are disabled or have low incomes. Federal law says Medicaid patients have the right to fill prescriptions from any willing and qualified provider.

That includes Walgreens.

Last year, California’s Medicaid program paid the company more than $1.5 billion. The California Department of Health Care Services said California will continue to comply with that law, Kaiser Health News reported.

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

Anthony York, spokesman for the governor, also told Kaiser Health News that the Newsom administration had invited Walgreens to apply again for the $54 million contract the state chose not to renew last month.

"Tweeting is not policy," York told the news outlet.

York said Friday the Walgreens contract was not renewed but that the company "may seek future procurement opportunities."

This is not the first time Newsom has made a splashy announcement without first working out all of the details behind it. At the beginning of the pandemic, the Newsom administration quickly signed a contract to purchase masks and other personal protective equipment, frustrating some lawmakers who did not know the details.

"This is something that politicians bump up against all the time," said Jessica Levinson, a law professor at Loyola Marymount University who focuses on politics and elections. "They want to say something strong and big and bold and splashy, and the devil is in the legal details."

Newsom’s spat with Walgreens began after the company indicated it would not distribute abortion pills by mail in some conservative states. That pill, mifepristone, when combined with another pill, will end a pregnancy. It’s been approved since 2000 in the U.S. for use up to the 10th week of pregnancy. Today, more than half of all abortions in the U.S. are done this way, according to the Guttmacher Institute, a research group that supports abortion rights.

Several states have taken steps to restrict mifepristone, after the U.S. Supreme Court struck down federal abortion protections last year. Earlier this year, attorneys general in 20 states, mostly with Republican governors, warned Walgreens it could face legal consequences if it distributed mifepristone in their states. Walgreens responded by saying it would not distribute mifepristone in states where it is not legal to do so.

On Friday, Walgreens spokesperson Fraser Engerman referred questions to Newsom’s office. But Engerman reiterated the company’s position about abortion pills.

"Walgreens plans to dispense mifepristone in any jurisdiction where it is legally permissible to do so," Engerman said. "Once we are certified by the FDA, we will dispense this medication consistent with federal and state laws. Providing legally approved medications to patients is what pharmacies do, and is rooted in our commitment to the communities in which we operate."

Newsom’s former chief of staff, Ann O’Leary, represented Walgreens in discussions with the Newsom administration over the issue last month, Politico reported.