Walgreens Pays $269.2 Million to Settle Fraud Allegations

January 24, 2019 | Geoffrey R. Kaiser | False Claims Act | Fraud and Abuse | Litigation | Medicare and Medicaid | Pharmaceuticals

Walgreens Boots Alliance, Inc., the operator of the Walgreens pharmacy chain, has agreed to pay $269.2 million in two settlements with the U.S. Department of Justice to resolve fraud allegations. The two cases arose from lawsuits filed by whistleblowers under the False Claims Act and were prosecuted federally by the U.S. Attorney’s Office for the Southern District of New York, which announced the settlements on January 22.

In one settlement, Walgreens must pay $209.2 million to resolve allegations that it knowingly billed the Medicare and Medicaid programs for hundreds of thousands of insulin pens dispensed to beneficiaries who did not need them. Walgreens admitted that it configured its pharmacy management system to prevent its pharmacists from dispensing less than a full box of insulin pens even when a patient did not require that much insulin, and circumvented federal program limits on the total number of daily doses that could be dispensed and reimbursed. These actions led to millions of dollars in program payments for medically unnecessary insulin, wasted valuable medication, and risked improper resale of insulin pens on the internet. In the second settlement, Walgreens agreed to pay $60 million and admitted that, contrary to Medicaid’s “best price” requirements, it did not disclose and seek reimbursement based on the discounted drug prices it offered customers through a program known as the Prescription Savings Club, causing Medicaid to vastly overpay Walgreens for the drug claims.

Approximately $69.2 million of the $269.2 million will be paid back to state Medicaid programs. As part of the settlements, Walgreens also entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. The CIA requires various remedial measures, including board oversight and multi-site claims reviews to be conducted by an Independent Review Organization.

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