Walgreens has agreed to pay more than $35 million to settle Medicare reimbursement disputes that resulted from the company allegedly switching three of its drugs from generic drugs to name brand drugs in an attempt to receive higher reimbursement rates.
Walgreens has agreed to pay the federal government, 42 states and Puerto Rico a total of $35 million, plus investigative costs of approximately $280,000.
Walgreens executives said they have set aside reserves for the settlement, which will have no impact on the company’s overall financial results.
The settlement is the result of a joint federal-state investigation arising from the filing of a False Claims Act lawsuit in the U.S. District Court in Chicago in 2003.
The whistleblower's complaint alleged that Walgreens filled prescriptions for numerous Medicaid recipients by aggressively switching dosage forms of ranitidine (the generic form of Zantac, fluoxetine (the generic form of Prozac), and selegiline (the generic form of Eldepryl), and that this conduct violated various federal and state statutes and regulations.
"This case is part of our larger, ongoing effort to prevent abuse of our Medicaid system," said Attorney General Lisa Madigan. "Actions like the dosage switching involved here prevent our Medicaid programs from using limited resources as widely as possible and, ultimately, harm the patients who benefit from these programs."
Walgreens also has agreed to the terms of a corporate integrity agreement with the Office of the Inspector General of the Department of Health and Human Services. The agreement will include provisions that will ensure that Walgreens does not switch dosage forms of medications if the result would increase the costs to third-party payers, including Medicaid, and will subject the company's billing practices to ongoing federal scrutiny.
The company denies any wrongdoing in connection with the settlement.