Cold Storage, Medicaid Coverage: Inside the Walgreens, CVS Vaccination Deal for Nursing Homes

The federal government last week tapped a pair of retail pharmacy giants to distribute an eventual COVID-19 vaccine to nursing home residents across the country, and while there remain significant questions about the logistics of distributing an as-yet-unapproved vaccine, officials have continued to position the plan as the only workable solution to a massive public health challenge.

The Department of Health and Human Services (HHS) touted the Trump administration’s preference for relying on private industry to tackle the coronavirus crisis when announcing the deal with CVS Health (NYSE: CVS) and Walgreens Boots Alliance (Nasdaq: WBA) last week.

“It’s yet another example, particularly underneath the Operation Warp Speed banner, of a public-private partnership,” HHS deputy chief of staff for policy Paul Mango said during a Friday call with reporters. “We are enabling these companies to assist us in delivering and executing on our strategy of protecting the most vulnerable.”


Operation Warp Speed refers to the administration’s COVID vaccine development efforts, which remain in progress.

HHS officials framed the Walgreens/CVS partnerships, which nursing home operators can opt into starting this week, as a vital preparation for distributing vaccines within 24 to 48 hours of their emergency approval by the Food and Drug Administration (FDA).

Providers do not have to use Walgreens or CVS, and are free to establish vaccine partnerships with other preferred long-term care pharmacy partners. But the HHS officials repeatedly emphasized the size and scale of the two retail heavyweights as reasons that nursing homes should opt in.


“We solicited input and had discussions with many different potential partners, the vast majority of whom told us they simply could not deliver on these capabilities and what our executional requirements were,” Mango said.

Mango in particular noted the companies’ IT infrastructure, workforce, and physical assets — key considerations given that HHS is asking CVS and Walgreens to handle all aspects of the vaccine distribution process to nursing homes, from specialized storage to transportation to meeting federal and local data reporting requirements.

“I want to emphasize that this program is not mandatory for long-term care facilities,” Jay Butler, deputy director for infectious diseases at the Centers for Disease Control & Prevention (CDC), said. “Those that choose not to participate in the program need to be prepared to have the resources to address all aspects of COVID-19 vaccination through their state health departments or other resources.”

Cold storage and handling have emerged as major potential pain points, with a vaccine under development at drug giant Pfizer requiring temperatures as low as negative 94 degrees Fahrenheit.

“That has very significant ramifications for the distribution chain, which includes long-term care pharmacies, in terms of costs, because there are not a lot of places that are currently equipped — including distribution centers for wholesalers, major shippers to the commercial markets like FedEx or the postal service,” Alan Rosenbloom, president and CEO of the Senior Care Pharmacy Coalition, told SNN last month.

That Pfizer vaccine is the only one of six under development that “requires ultra-cold chain storage,” according to Maj. Gen. Chris Sharpsten, the Army official in charge of supply and distribution for the Operation Warp Speed effort, said.

The infrastructure, Sharpsten said, is largely already in place, with shipping containers that can keep the vaccines cold in dry ice for extended periods of time.

“We’re working with not only the manufacturing company, but also with CVS and Walgreens, to ensure that they have capabilities to receive that type of product. Currently, there are no known issues in terms of their ability to receive and use that product,” Sharpsten said.

Because the acquisition and distribution costs for the vaccines have already been covered by the federal government, according to the officials, the only remaining step will be for Walgreens and CVS to bill Medicare, Medicaid, and private payers for the cost of actually administering the immunizations.

Individual state Medicaid agencies must approve CVS and Walgreens as qualified vaccinators before they can begin receiving reimbursements, Mango said, though the coverage should extend also to managed Medicare and Medicaid plans; the uninsured can potentially benefit from a fund set aside for COVID-related expenses associated with patients who do not have health coverage.

“There is no transfer of financial resources from the federal government to either of these two companies independent of them vaccinating seniors and getting the reimbursement for that,” Mango said. “If no nursing home or senior living facility or assisted living facility in the country wanted to use CVS or Walgreens, they wouldn’t get a penny — not from us, not from the nursing homes, not from Medicare.”

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