The State Of California Cancels Its $54 Million Contract With Walgreens Over Abortion Pills

Gavin Newsom, the governor, claims a pharmacy chain gave in to extreme pressure by refusing to offer mifepristone in some areas.

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After the pharmacy chain's announcement that it would stop selling the abortion medicine mifepristone in select areas, California Governor Gavin Newsom announced Wednesday that his state would not renew a $54 contract to supply with Walgreens Boots Alliance Inc.

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The contract, which has an April 30 expiration date, primarily serves the California Department of Corrections and Rehabilitation and its correctional health service by providing specialty prescription medications.

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Two days prior to the announcement, Newsom had tweeted that California would no longer do business with Walgreens or "any firm that trembles to the extremists and puts women's lives in danger. We've finished.

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Due to possible legal repercussions, Walgreens WBA, +1.00% announced last week that it would stop selling mifepristone in 20 Republican-led states, including those areas where abortion is permitted. When combined with the medication misoprostol, mifepristone was approved by the Food and Drug Administration in 2000 as a method of ending pregnancies up to ten weeks. The ambitions of other drugstore businesses have not been discussed.

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California "won't sit idly by when corporations capitulate to extremists and cut off essential reproductive care and freedom," Newsom declared in a statement on Wednesday. California is on track to have the fourth-largest economy in the world, and we will use our market dominance to protect the right to make one's own decisions.

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In a tweet on Wednesday, Newsom added, "We're serious about not participating in firms that give in to the extreme agenda of the @GOP.

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Although Walgreens has yet to market the medication in any state, it is looking for FDA approval to do so.

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In response to incorrect and misleading information, the state of California decided not to renew our long-standing contract, said Fraser Engerman, senior director of external communications at Walgreens, in an email on Wednesday. It's unclear where this agreement would now be shifted because Walgreens is dealing with the same issues that other retail pharmacies are, while other retail pharmacies have indicated that they would handle this scenario differently.

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In accordance with federal and state laws, he continued, "Walgreens plans to administer mifepristone in any area where it is legally acceptable to do so after the FDA certifies."

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Compared to the S&P 500's SPX, +0.14% 4% rise in 2023 and 7% decrease over the previous year, Walgreens shares are down approximately 8% year to date and down 28% over the past 12 months.