Walgreens agrees to pay $269 million in fraud settlement with government

Walgreens Boots Alliance Inc. agreed to pay $269.2 million to settle U.S. claims that the drugstore chain defrauded a federally funded health care program over insulin drugs and a consumer-discount initiative.

The two settlements, announced Tuesday, cover allegations over improper billing. In the first one, the company agreed to pay $209.2 million to resolve claims it billed Medicare, Medicaid and other programs for hundreds of thousands of insulin pens it distributed to people who didn’t need them. In the second, Walgreens said it would pay $60 million for overbilling Medicaid by not disclosing lower drug prices it offered in a discount program.

The first settlement requires Walgreens to pay about $168 million to the United States and about $41.2 million to state governments. In the second, about $32 million will go to the federal government and $28 million will go to the states.

The accords come as scrutiny of health-care costs increases across the country. The Trump administration has been focused on trying to drive down prescription-drug costs, and lawmakers on both sides of the aisle have introduced bills aimed at capping pharmaceutical prices. States including California have also floated plans to try to rein in spending on prescription drugs.

Walgreens is also confronting an increasingly competitive retail and pharmacy landscape after rival CVS Health Corp. agreed to acquire health insurer Aetna Inc. and Amazon.com Inc. bought online pharmacy PillPack.

“Overbilling and improper billing of Medicare and Medicaid unduly burden taxpayers and put the solvency of these vital health-care programs at risk,” U.S. Attorney Geoffrey Berman in Manhattan said in a statement. The company “admitted and accepted responsibility for the conduct the government alleged in its complaints under the False Claims Act.”

Berman thanked the Medicaid Fraud Control Units for Indiana, Washington, New York, and Texas for their assistance.

‘Best interests’

Walgreens said in a statement that it is pleased to have resolved the suits, cooperated with the government and “admitted no wrongdoing.” The company declined to elaborate on whether it “accepted responsibility” for the allegations in the U.S. complaint, as prosecutors said.

"We are resolving these matters because we believe it is in the best interest of our customers, patients and other stakeholders to move forward,” the company said in a statement.

The settlement has been fully accounted for in Walgreens’ financial statement as of Nov. 30, the company said, adding that it entered into a corporate integrity agreement with the U.S. Health and Human Services Department that builds on its existing compliance program.

Walgreens configured its systems so that pharmacists couldn’t dispense less than a full box of five insulin pens, and then it submitted false data in reimbursement claims indicating that the total number of daily doses didn’t go over program limits, prosecutors said. As a result, Walgreens received millions of dollars for insulin that many people didn’t need while wasting "substantial quantities" of the medication, the U.S. said.

The other settlement involves a program called the Prescription Savings Club that gave discounts to customers who ordered drugs from Walgreens. Prosecutors said the company failed to disclose the lower prices when seeking reimbursement from Medicaid.

Both cases arose from lawsuits filed years ago by whistle-blowers under the False Claims Act. They were both unsealed on Tuesday. Walgreens’ payments will go to federal and state governments.

The U.S. didn’t say how much the whistle-blowers stand to collect.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.