In calling for the arbitration decision to be vacated, Walgreens, as court documents call the subsidiary, said it knew the bar for such a move was high but called the more than a half-billion-dollar award a "staggering sum." Walgreens' filing also said the arbitrator exceeded his authority by failing to interpret Walgreens' and Humana's contracts reasonably and that the arbitration was "marred by serious irregularities."
At issue is whether Walgreens charged Humana pharmaceutical prices that weren't "usual" or "customary" after establishing a consumer pharmacy savings club, with prices that were not passed along to Humana.
According to Walgreens, "no ordinary reader of the contract at issue would find that Walgreens had done anything wrong."
The Walgreens filing also said Washington, D.C., law firm Crowell & Moring should not have represented Humana after previously giving Walgreens legal advice on its drug pricing programs. The filing said that after advising Walgreens, Crowell & Moring then advised Humana that Walgreens and other pharmacies had used savings clubs to overcharge Humana.
Reuters reports that Walgreens sued Crowell & Moring in 2021, with Reuters writing that Walgreens was "seeking, among other things, indemnification from any arbitral award, an injunction against Crowell and disgorgement of the firm's profits from its work for Humana." In that report, Reuters said Walgreens is appealing a judge's ruling denying Walgreens' request to stop the law firm from representing Humana. That appeal is pending.
Crowell & Moring said in a statement: “We are confident that the arbitrator’s thorough and well-reasoned award will be affirmed. We have no conflict of interest in representing Humana, and we are confident that we will prevail in the litigation filed by Walgreens against Crowell in D.C. Superior Court. The meritless claim against Crowell is no basis for vacating Humana’s arbitration award against Walgreens.”
Louisville, Ky.-based Humana, in a filing asking the D.C. federal district court to confirm the arbitrator's decision, said "a highly qualified arbitrator issued a 73-page reasoned Final Award." The Humana filing called the arbitration "methodical and thorough" and argued that courts have only a limited role in reviewing arbitrations.
In the filing, Humana characterized Walgreens' drug pricing actions as "a decade-and-a-half-long scheme to overcharge Humana" through Walgreen's "submission of millions of falsely-inflated “usual and customary” (“U&C”) prices to Humana, which significantly overcharged Humana and breached the parties’ contracts."
Humana and Walgreens did not immediately respond to requests for comment.
This story first appeared in Crain's Chicago Business and has been updated to correct that Crowell & Moring had a statement, which has been added.