Rite Aid may be the first of many pharmacies to refuse to fill prescriptions under the Oregon Health Plan if a new lower reimbursement rate takes effect March 1.

Pharmacy owners say they are already struggling to get by on low reimbursements for expensive prescription medications.

”At least behind the scenes, every pharmacy organization in the state has said it will not take another reduction,” said Jerry Jackman, owner of the Prineville Pharmacy. ”I’m optimistic as a professional that, in the situation, (Rite Aid) is just the first.”

Rite Aid, based in Harrisburg, Pa., ran advertisements in newspapers in Eugene, Portland and Salem Thursday to alert customers that the company might pull out of the program. The ads asked Oregon Health Plan recipients to call Gov. Ted Kulongoski about the proposed cuts.

”With this lower reimbursement, it’s very hard for us to cover our costs,” said Jody Cook, spokeswoman for Rite Aid Corp. ”This is not a decision that we would make lightly at all, but we have to make a fair profit to operate our stores.”

Tom Holt, executive director of the Oregon Pharmacists Association, said his office has been flooded with phone calls from pharmacists wanting to know the procedure for getting out of the plan.

Currently, Oregon’s reference price for reimbursement is the average wholesale price of a prescription, minus 14 percent. For example, if a prescription costs a pharmacy $100, the state reimburses it $86. After March 1, that amount will be reduced to $83. Holt said the difference will cost pharmacies in the ballpark of $17,000 for the rest of the fiscal year.

”I can tell you that I think everyone is looking at their numbers and evaluating whether or not they can stay in the Oregon Health Plan at that rate,” he said. ”The state has finally reached the point where we can go no further.”

A federal study found that pharmacies generally buy drugs from manufacturers at anywhere from 20 percent to 60 percent off the average wholesale price, said Allison Knight, policy unit manager for Office of Medical Assistance Programs.

But Cook said the drugs’ price is only a small portion of the cost it takes to fill a prescription. She said at 1 percent to 2 percent, retail pharmacists have the smallest net profit margin of anyone in the prescription business.

Cook said the new rate would be lower than any other Medicaid pharmacy reimbursement rate in the nation.

Jackman said he has not yet elected to drop the Oregon Health Plan. But if the governor’s office follows through with lower reimbursements come March 1, ”there’s no question,” he said. ”They’ve reduced it to the point where we’re subsidizing the whole health care system.”

The Prineville pharmacist recently moved his pharmacy into a 6,500-square-foot building, which is about 2,500 square feet larger than what he used before. He didn’t move because business is thriving, he said. He moved so he could sell gifts, greeting cards and other items to absorb losses on prescriptions, and pad his profit margin.

”The only reason we moved is because the pharmacy could not support itself any longer,” he said.

If pharmacists around the state simultaneously quit participating in the health plan, the state may be forced to reconsider the reduction in reimbursements.

”They’ll have no choice,” Jackman said. ”If you’ve got 250,000 people you’re supplying medication for, and they can’t get medication, you’re looking at an uprising. Politically, that’s very difficult for the state to ignore.”

Ultimately, pharmacies hope a mass exodus from the Oregon Health Plan will force the state to rethink the lower reimbursements.

”I think that the state is playing a game of chicken,” Holt said. ”They’re waiting to see who blinks. Unfortunately, the real victims here are the people who depend on Medicaid who have no other place to turn for health care … We would not tolerate taking people on the front steps of the Department of Human Services and putting bullets through their heads. But in some cases, that’s what we’re doing with these cuts.”

”I don’t know if pharmacies are going to pull out,” said Lynn Read, acting administrator of the Office of Medical Assistance Program in Salem. They’re in that decision-making mode, and there are several options they would consider. We obviously have a concern in terms of clients having access to program services.”

Even if the state does appease the pharmacists and leave the rate untouched, a conundrum still exists, Read said. The budget cuts must come somewhere.

”We have three choices in terms of looking at reductions,” Read said. ”It’s reductions in people (in terms of the number who may receive OHP benefits); a reduction in services people are entitled to, or reductions in reimbursement. We’ve got $40 million in reductions to make, and they are distributed in that range of types of action.”

Rite Aid will encourage Oregon to consider a preferred drug list of generic drugs for OHP patients to reduce costs, Cook said. Other options include giving doctors incentives for prescribing generic brands and securing rebates from pharmaceutical companies for certain highly advertised drugs, she said.

Rite Aid has competition in each of its Oregon locations, so customers should have a place to get their medications if the company follows through on its threat, said Scott Ballo, a spokesman for Kulongoski.

”Obviously we’re disappointed, but there are alternatives,” said Ballo, who also mentioned the availability of mail-order prescriptions.

Lisa Rosetta can be reached at 541-617-7812 or lrosetta@bendbulletin.com. The Associated Press contributed to this report.