Longs Drug Stores to Continue to Service Medi-Cal Patients FOCUS IS ON PATIENTS DURING BUDGET CRISIS

WALNUT CREEK, Calif., July 1 /PRNewswire-FirstCall/ -- Longs Drug Stores Corporation announced today that it will continue to honor new and refilled prescriptions for their patients covered by Medi-Cal despite the State's plan to cut reimbursements effective July 1. In February, in the face of a multi-billion dollar deficit the California legislature passed and the Governor signed into law a 10% reduction on all Medicaid (Medi-Cal) reimbursements. Because under the new law the State will be paying pharmacies less than their cost for the brand medication in many cases, it is anticipated that some pharmacies may decline to fill such prescriptions. If this occurs, Longs is particularly concerned for cancer, HIV/AIDS, and mental health patients who could be impacted.

"We believe that continuing to fill these prescriptions is the right thing to do for our patients at the current time," said Bruce Schwallie, EVP of Business Development and Managed Care for Longs Drugs. "We have a tradition of caring for Californians for over 70 years and we want to make certain our patients have access to their necessary medications. Discussions continue with the State as to how the current budget crisis can be addressed while minimizing the impact for people who need these medications to not only maintain their health and wellness, but in some extreme cases, to survive."

The 10 percent reimbursement reduction for prescription drug products will mean that prescription reimbursements will be reduced to the point that a pharmacy will take a loss to dispense most brand name prescriptions to a Medi-Cal beneficiary. This reduction will pay pharmacies below their actual drug ingredient cost for approximately one third of the top 278 drug products including drugs in 6 key therapeutic categories.

Schwallie added, "Californians have relied on Longs for their health and wellness needs since 1938 and we want to do everything we can do to maintain the trust they have put in us. We want them to know we are doing whatever we can reasonably do for them during this challenging time." The company indicated that this policy of filling brand name prescriptions would be evaluated daily pending the outcome of current negotiations going on within the state legislature.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, Longs plans to continue to honor prescriptions covered by Medi-Cal and are indicated by such words as "will", "expects", "estimates", "goals", "plans" or similar words. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause actual events and results to vary materially from those contemplated by such statements. Risks and uncertainties relate to, among other things, developments with respect to the state budget crisis, the outcome of negotiations with the state legislature, changing market conditions in the overall and regional economy and in the retail industry, changes in drug pricing, and other factors described from time to time in the Company's news releases and in its annual, quarterly and other reports filed with the Securities and Exchange Commission. Please refer to such filings for a further discussion of these risks and uncertainties. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this news release.

About Longs Drug Stores Corporation

Headquartered in Walnut Creek, California, Longs Drug Stores Corporation is one of the most recognized retail drug store chains on the West Coast and in Hawaii. The Company operates more than 500 retail pharmacies and offers a wide assortment of merchandise focusing on health, wellness, beauty and convenience. Longs also provides pharmacy benefit management services and Medicare beneficiary prescription drug plans through its wholly-owned subsidiary, RxAmerica, LLC. Additional information about Longs and its services is available at http://www.longs.com/ and more information about RxAmerica is available at http://www.rxamerica.com/.

Contact: Mark L. Holz

925-979-3979

Longs Drug Stores Corporation

CONTACT: Mark L. Holz of Longs Drug Stores Corporation, 1-925-979-3979

Web site: http://www.longs.com/
http://www.rxamerica.com/