Walgreens Settles 2 Lawsuits Charging Fraud

Two lawsuits filed against Walgreens have been settled with the national drug store chain agreeing to pay a total of more than $260 million.^1,2 Filed by whistleblowers, both cases made allegations that Walgreens had fraudulently overbilled federal health care programs.^1,2

In the case United States of America et al., ex rel. Adam Rahimi et al. v. Walgreen Boots Alliance, Inc., the office of New York Attorney General (AG) Letitia James announced Tuesday it had worked with the federal government and other states to reach at nationwide settlement of $209.2 million with Walgreens Boots Alliance over allegations that its Walgreens pharmacies were over-dispensing insulin pens.¹

The case of United States ex rel. Marc D. Baker v. Walgreen Co. was settled for $60 million. According to the law firm Stein Mitchell Beato & Missner LLP, which represented Baker, the settlement resolved allegations that Walgreens had defrauded the government and 39 states by submitting false and inflated prices for prescription drugs, which increased reimbursements paid by government health care plans.²

In a prepared statement, Walgreens officials acknowledged resolution of these matters, and said the company had fully cooperated. However, Walgreens' statement said the company did not admit to any wrongdoing.³

“Walgreens is a company of pharmacists living and working in the communities we serve, and we have always taken the safety and reliability of the medicines our patients need very seriously. We are resolving these matters because we believe it is in the best interest of our customers, patients and other stakeholders to move forward,” Walgreens said in the prepared statement. ³

According to James, the lawsuit filed on behalf of Rahimi alleged that Walgreens did not always adhere to dosages prescribed by physicians when filling insulin prescriptions. As a result, Medicare and Medicaid beneficiaries routinely received more insulin than prescribed, and Walgreens billed Medicaid for the additional doses.¹

Furthermore, according to James, Walgreens repeatedly reported erroneous supply data to state Medicaid programs. Medicaid programs approved and paid a substantial number of claims submitted by Walmart for insulin pen refills that would not have been approved if the supply data was being properly reported.²

In recent years, according to the AG’s office, New York’s Medicaid program paid an average of approximately $425 per box of 5 insulin pens to pharmacies on behalf of Medicaid beneficiaries.¹

“Cheating our state’s Medicaid program will never be tolerated by this office,” said James, in a press release.¹ “We will continue to root out illegal practices that increase costs of health care and medication for all New York Medicaid recipients, and will hold accountable any provider that engages in these deceptive practices.”

The other lawsuit alleged that although Walgreens offered discounted prices on prescription drugs to the general public through the Walgreens Prescription Savings Club (PSC), including government health care beneficiaries, the company charged significantly higher prices for the same medications when they were paid by government programs. Baker alleged that Walgreens made fraudulent claims to government health care plans for payment of prescription drugs by exceeding usual and customary prices.²

According to spokesmen for Stein Mitchell Beato & Missner, Walgreens made an admission as part of the $60 settlement that the government had paid the pharmacy chain “more money in reimbursements than they would have paid if Walgreens had identified its PSC prices as its [usual and customary] prices.”³

In settling the cases, Walgreens has entered into a Corporate Integrity Agreement with the Office of the Inspector General of the Department of Health and Human Services. According to the company, this agreement builds upon the company’s already existing comprehensive compliance program.³

According to Walgreens, the settlement amounts have been fully reserved in the Company Consolidated Condensed Financial Statement, dated November 30, 2018. ³

References

• Attorney General James Announces Settlement With Walgreens Boots Alliance Over Medicaid Fraud Allegations For Over-Dispensing Insulin Pens [news release]. New York, New York; January 22, 2019: NY Attorney General's Office. https://ag.ny.gov/press-release/attorney-general-james-announces-settlement-walgreens-boots-alliance-over-medicaid. Accessed January 23, 2019.
• Walgreens To Pay Feds And States $60M In Largest-Ever Settlement By A Pharmacy Chain For Overcharging For Drugs [news release]. Washington, DC; January 22, 2019: Stein Mitchell Beato & Missner LLP. https://www.steinmitchell.com/media-news-66.html. Accessed January 23, 2019.
• Walgreens Statement on Announced Settlement with U.S. Department of Justice and the Office of the Inspector General of the U.S. Department of Health and Human Services [news release]. Deerfield, Illinois; January 22, 2019: Walgreens Media Relations. http://www.pharmacytimes.com/link/248. Accessed January 23, 2019.