Walgreens Agrees to Pay $60M to Settle Allegations it Overcharged for Drugs

Walgreens Co., the largest retail pharmacy in the U.S., has agreed to pay $60 million to settle allegations that it overcharged Medicaid and other government healthcare plans for prescription drugs.

The historic settlement resolves allegations that the company defrauded the government and 39 states by submitting inflated and false prices for prescription drugs in order to increase its government reimbursements.

The settlement is the largest of its kind against a retail pharmacy under the False Claims Act (FCA), and is due to the efforts of Marc D. Baker, a whistleblower, and his legal counsel.

By law, pharmacies cannot charge more than the customary price of a prescription drug. Baker alleged that Walgreens was making false claims of payment of prescription drugs by submitting inflated customary prices to government healthcare plans to increase its reimbursements.

The lawsuit filed by Baker in 2012 disclosed that the pharmacy offered discounted prices for drugs to the public through its Walgreens Prescription Savings Club (PSC), including government healthcare beneficiaries. At the same time, the company was charging higher prices for the same drugs when they were paid for by government programs.

As part of the settlement, Walgreens admitted that the government “paid Walgreens more money in reimbursements than they would have paid if Walgreens had identified its PSC prices as its [usual and customary] prices.”

The case’s success entitles Baker to a percentage of the amount recovered. The whistleblower will receive 21% of the amount recovered by the government.

The settlement resolves a six-year, multi-prong investigation into the company’s pharmacy and drug pricing practices. In January 2018, Walgreens agreed to a partial settlement of $50 million to be paid to the government. That settlement was related to unlawful kickbacks intended to encourage government beneficiaries to fill their prescriptions at Walgreens pharmacies.

Baker’s lawsuit was filed in the United States District Court for the Southern District of New York.