Walgreens to pay $270M to settle fraud allegations 

File folders labeled "insurance," "fraud," "claims," and "under investigation"
Walgreens will pay more than $270 million to settle three fraud cases, including one where it dispensed unneeded insulin pens. (Getty Images/Olivier Le Moal)

Walgreens will pay more than $270 million to settle several fraud cases, including one where the pharmacy chain improperly billed Medicare and Medicaid for insulin pens. 

In the settlement, Walgreens admitted to submitting fraudulent billing data to the federal healthcare programs for the pens, according to the Department of Justice.  

Its electronic pharmacy management system was set up to prevent pharmacists from dispensing anything less than a box of five insulin pens, even to patients who did not need them. When the number of pens exceeded Medicare and Medicaid’s limit for days of supply, the company would tweak its claims to say they were within the appropriate limits. 

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In addition to securing millions in improper payments, the practice led to a significant waste of insulin. Walgreens will pay $168 million to the federal government in the settlement and a separate $41.2 million to state governments whose Medicaid programs were defrauded, according to DOJ. 

“Walgreens engaged in practices that undermined the integrity of the Medicare and Medicaid programs, compromised patient care and wasted taxpayer dollars,” Scott J. Lampert, special agent in charge for the Department of Health and Human Services Office of Inspector General, said.  

RELATED: Microsoft, Walgreens team up to develop new healthcare delivery models 

Selling insulin at such a high volume also opened the door for other risks, such as the illegal online sale of excess pens, according to the announcement. 

Prescription Savings Club settlement

Walgreens also settled a Medicaid fraud case in which it failed to disclose discounted prices it offered to enrollees through its Prescription Savings Club, according to DOJ. Through that program, it offered discounts to patients at the pharmacy counter on thousands of drug products. 

However, it did not include this pricing in its claims to Medicaid, DOJ said, resulting in millions in overpayments. The retail chain will pay $32 million to the feds and $28 million to state governments as part of the settlement. 

Both cases were initially filed by whistleblowers, according to DOJ. As part of the settlements, Walgreens has agreed to enter into a Corporate Integrity Agreement with OIG on top of the payments. 

RELATED: Walgreens and Verily announce partnerships for diabetes, medication adherence 

Stimulant medications settlement

In a third settlement, which was announced separately, Walgreens will pay an additional $3.5 million to the U.S. government and Wisconsin's government for improperly billing Medicaid for stimulant medications.

Between 2011 and 2014, Walgreens regularly dispensed these drugs to Medicaid patients without first verifying with the physician that they were prescribed for a medical need, such as attention deficit disorder, as is required by Wisconsin’s Medicaid program. 

By failing to verify the prescriptions, Walgreens billed Medicaid for medications that may have been unnecessary, according to DOJ. Walgreens does not admit fault in the settlement.

“Pharmacies play an important gatekeeping role in the Medicaid program to ensure that the millions of dollars spent each year on prescription medications buy drugs that are medically necessary,” U.S. Attorney Matthew Kruger said in the announcement. 

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