Walgreens, one of the America’s largest retail pharmacies, has agreed to pay a total amount of $60 million in settlement for allegations that the company was overcharging government healthcare plans which include Medicaid for prescription medicines, as announced by Stein Mitchell Beato & Missner LLP today.
It is the largest-ever settlement by a pharmacy chain that would resolve claims that Walgreen had defrauded the U.S. government with maximum of 39 states by submitting false and excessively high prices for prescription medicine in an attempt to increase it reimbursement by the government. According to news reports, the allegations came under the False Claims Act (FCA)’s qui tam whistleblower provisions.
Andrew M. Beato, Whistleblower Practice Group chairman of Stein Mitchell Beato & Missner LLP said that such cases represent whistleblowers’ importance in the private-public setting to avoid any government fraud. Further, it exemplifies an individual’s power to expose and prevent fraud against the government.
It was whistleblower Marc D. Baker’s efforts that brought the settlement. According to Baker and his legal counsel, under the federal and state law, the amount charged for prescription drugs by a retail pharmacy should not exceed usual and customary costs of the drug. The whistleblower alleged that Walgreens submitted inflated customary prices to the government healthcare plans, making false payment claims for prescription drugs which unethically surged its reimbursements.
The lawsuit was filed back in 2012, disclosing the company offered discounts on prescriptions drugs to general public through its Prescription Savings Club (PSC), including beneficiaries of government healthcare program, while it charged prices of the same drugs significantly higher when the government pays.
As a part of the settlement, Walgreens admitted that the government paid them higher amount of money in reimbursement than it would have paid if the retail pharmacy has declared the usual and customary prices.
Most importantly, a successful case provides the whistleblower a percentage of the recovered amount and Baker is expected to receive 21 percent from the success of his case.
Walgreens settlement worth $60 million resolves a multi-pronged investigation into pharmacy and drug pricing practices by the United States Attorney’s Office for the Southern District of New York. It is a capstone to number of allegations against Walgreens rising from the six-year investigation by Baker’s lawsuit. In a partial settlement in January last year, Walgreens paid an amount of $50 million to the governments regarding its intent to induce government beneficiaries for filling prescriptions at its pharmacies.