National pharmacy giant Walgreens will pay $269.2 million to settle two separate allegations that the chain defrauded the federal government and 39 states in elaborate overbilling schemes.
Walgreens has admitted responsibility for the fraudulent billing of the federal government and states alleged by the Justice Department, the U.S. attorney for the Southern District of New York announced late Tuesday.
The first $209 million settlement resolved allegations that Walgreens billed Medicare, Medicaid and other programs for hundreds of thousands of insulin pens for people who did not need them. Roughly $42 million of this settlement will go to states.
Walgreens also paid $60 million over allegations that it charged Medicaid higher prices than the public, and the chain failed to disclose its discount programs to the government. About $28 million of this sum will go to states.
A Walgreens spokesperson said the company "is pleased to have resolved these matters with the Department of Justice."
"The company fully cooperated with the government and has admitted no wrongdoing," the spokesperson said. "Walgreens is a company of pharmacists living and working in the communities we serve, and we have always taken the safety and reliability of the medicines our patients need very seriously. 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 settlements, approved last week by federal district judges and unsealed on Tuesday, lay out the details of the government complaint, which reveals a complex and sophisticated system that Walgreens deployed to inappropriately bill Medicare, Medicaid and other programs.
In the complaint dealing with wrongful billing for insulin pens, the government alleged that the pharmacy rigged its electronic pharmacy management system to prevent dispensing of less than a full box of insulin pens, even if a patient didn't need that volume.
Walgreens also dodged federal regulations on dispensing limits for insulin, according to the complaint. In the reimbursement claims, the pharmacy falsely stated that the total daily dose supplies did not go over the limit. This led to the government paying out millions of dollars for insulin that patients didn't need and that largely went to waste.
The Justice Department warned that the practice not only led to potential health risks for the patients but also potential black market resale of the drugs online.
The second settlement involved Walgreens' "Prescription Savings Club," which offered discounts to the pharmacy's customers even as the pharmacy failed to report to state governments that these discounts were available.
Federal regulations require pharmacies to bill Medicaid only at the lowest stratum of certain drug price points, which include the "usual and customary price." States then set their own definitions for that price, and many include discount programs in this category.
Walgreens has entered into a "corporate integrity agreement" with HHS' Office of the Inspector General as part of the settlement, the spokesperson said on Wednesday.