Two separate settlements involving Walgreens, approved last week by U.S. District Court judges in Manhattan, were unsealed Tuesday, according to the U.S. Justice Department. U.S. officials said the company accepted responsibility for conduct the government alleged in complaints under the False Claims Act.
The first settlement, approved on January 16, 2019, requires WALGREENS to pay $209.2 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them. 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. WALGREENS thus repeatedly reported days-of-supply data to federal health programs that were different from, and lower than, the days-of-supply calculated according to the standard pharmacy billing formula.
The United States’ complaint alleges that WALGREENS routinely submitted false days-of-supply data to federal healthcare programs when it sought federal reimbursement for insulin pens it dispensed to federal beneficiaries who did not need them. Specifically, WALGREENS engaged in two practices that resulted in the fraudulent submissions. First, WALGREENS configured its electronic pharmacy management system to prevent its pharmacists from dispensing less than a full box of five insulin pens, even when patients did not need that much insulin. Second, when a full box of insulin pens exceeded the federal healthcare program’s limit on the total days of supply (i.e., the total number of daily doses) that could be dispensed and reimbursed at that time, WALGREENS evaded this restriction by falsely stating in its reimbursement claims that the total days of supply did not go over the limit. As a result, federal healthcare programs paid WALGREENS millions of dollars for insulin that many beneficiaries did not actually need, and substantial quantities of valuable medication were wasted. This conduct also opened the door to potential healthcare risks and abuse, such as the improper resale of insulin pens on the Internet.
The second settlement, approved on January 15, 2019, requires WALGREENS to pay $60 million to resolve allegations that it overbilled Medicaid by failing to disclose to and charge Medicaid the lower drug prices that WALGREENS offered the public through a discount program. The program called the Prescription Savings Club (the “PSC”) 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. Customers who enrolled in the PSC were eligible to receive discounts for thousands of types of drugs, and WALGREENS offered a savings guarantee under which PSC enrollees could recoup through a store credit the difference between the amount they paid to enroll in a given year and the amount they received in discounted savings in that year, and in submitting claims for reimbursement to Medicaid, WALGREENS did not identify its PSC program prices as its U&C prices for the drugs on the PSC program formulary, which resulted in the States paying more in reimbursement than they would have paid if WALGREENS had identified its PSC program prices.
The United States’ complaint in this case alleges that WALGREENS operated a program called the Prescription Savings Club (the “PSC”), under which customers received discounts when they ordered drugs from WALGREENS. Medicaid regulations directed WALGREENS to seek Medicaid reimbursement only at the lowest of certain drug price points, including the “usual and customary price” (“U&C price”). Medicaid rules of many states defined the U&C price as the price offered through discount programs like the PSC. Contrary to these requirements, WALGREENS did not disclose to Medicaid the discount drug prices it offered customers through the PSC when it sought reimbursement from Medicaid. As a result, Medicaid programs paid WALGREENS more in reimbursements than they would have paid had WALGREENS disclosed the lower PSC prices.
In both settlements, WALGREENS admitted and accepted responsibility for conduct the Government alleged in its complaints under the False Claims Act.
The cases are U.S. v Walgreens Inc., 12-cv-300, and U.S. v Walgreens Boots Alliance Inc., 15-cv-5686, U.S. District Court, Southern District of New York (Manhattan).