Walgreen Co. has agreed to pay $35 million to resolve allegations that Walgreens pharmacies switched patients to more expensive drugs in order to get more money from Medicaid, the third large settlement to arise out of what the government calls improper drug switching. In the agreement with the U.S. Justice Department, the Deerfield, Ill.-based company explicitly denies engaging in the alleged conduct, which was relayed to the government through a whistle-blower lawsuit filed in 2003.
According to the Justice Department, between 2001 and 2005, Walgreens dispensed capsules rather than tablets of generic Zantac, generic Prozac and brand-name and generic Eldepryl to Medicaid patients when doctors hadnt specified the form. The switches allowed the company to collect higher reimbursement while providing no additional medical benefit to patients, according to a Justice Department news release.
The federal portion of the settlement is $18.6 million, and 46 states and Puerto Rico will share $16.4 million. Whistle-blower Bernard Listiza is set to receive a total of $5 million to be drawn from those sums. CVS Caremark Corp. reached a $36.7 million settlement with the government in March involving alleged switching, and in 2006 Omnicare agreed to pay $49.5 million to resolve similar allegations. As with the Walgreen case, those investigations were triggered by Listiza.
Walgreen maintains the reimbursement was consistent with all applicable regulations and explains the settlement was reached to avoid the expense and uncertainty of litigation. -- by Gregg Blesch