Walgreen’s to pay $60M for drug overcharging
1/31/2019, 10 a.m.
Walgreen Co. (“Walgreens”), the nation’s largest retail pharmacy, has agreed to pay $60 million to settle allegations that it knowingly overcharged government healthcare plans such as Medicaid for prescription drugs according to Stein Mitchell Beato & Missner LLP. With this unprecedented settlement, Walgreens resolved allegations that the company defrauded the U.S. government in Illinois and 38 other States by submitting false and inflated prices for prescription drugs to increase its government reimbursements. The groundbreaking settlement is the largest of its kind against a retail pharmacy under the qui tam whistleblower provisions of the False Claims Act (FCA).
“This unprecedented case exemplifies the importance of whistleblowers in the public-private partnership to prevent government fraud,” said Andrew M. Beato, the Chair of Stein Mitchell Beato & Missner LLP’s Whistleblower Practice Group. “It illustrates the power of one individual to expose and stop fraud against the government – and, ultimately, U.S. taxpayers who foot the bill.”
The settlement was due to the efforts of whistleblower Marc D. Baker and his legal counsel Andrew M. Beato and Jed Wulfekotte of Stein Mitchell Beato & Missner LLP. Under federal and state laws, the amount charged by a pharmacy for a prescription drug cannot exceed the drug’s usual and customary price. Baker alleged that Walgreens made false claims for payment
of prescription drugs by submitting inflated usual and customary prices to government healthcare plans, including Medicaid, that fraudulently increased its reimbursements.
Baker’s lawsuit, which was filed in 2012, disclosed that Walgreens offered discounted prices on prescription drugs to the general public through the Walgreens Prescription Savings Club called PSC, including government healthcare program beneficiaries, while charging significantly higher prices for the same drugs when paid by government programs.
Walgreens admitted as part of the settlement 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.”
Importantly, a successful case entitles the whistleblower to a percentage of the amount recovered. Baker will receive 21 percent of the amount recovered by the government.
“Never think that a single voice can’t make a difference in holding corporate goliaths responsible for illegal and unethical behavior,” added Jonathan Missner, Managing Partner of Stein Mitchell Beato & Missner LLP.
The FCA’s qui tam provisions incentivize whistleblowers to report fraud on a government program with the protection of a court-ordered seal, confidentiality, and without company retaliation. More than $40 billion in government fraud has been recovered in FCA qui tam matters during the past 30 years.