Walgreens has agreed to a $106.8 million settlement over drug prescriptions that were billed to government programs but never dispensed, the Department of Justice (DOJ) announced Friday.
The alleged false claims for payment were submitted between 2009 and 2020 and brought “tens of millions of dollars” to the large drug chain, the government alleges. Prescriptions that weren’t picked up by beneficiaries were still processed by Walgreens, which the company said in a statement to press was the result of a software error.
“Adopting new technology and systems can be beneficial for providers, beneficiaries, and federal payors, including Medicare, Medicaid and TRICARE,” U.S. Attorney Damien M. Diggs for the Eastern District of Texas said in the announcement. “However, we will not allow companies to hide behind their implementation of ill-conceived technology and systems that result in billing federal healthcare programs for goods and services never provided to beneficiaries. In those situations, we will pursue the companies and ensure that the taxpayer is made whole.”
The settlement resolves three pending whistleblower cases initially filed in September 2015, April 2019 and April 2020, according to settlement documents.
In January 2020, Walgreens disclosed to the government “that issues with its billing systems and practices” had led to billed prescriptions for which it should not have received payment. The company cooperated with the government’s investigation and took “significant steps to remediate” the billing issue, including the implementation of a fix for its proprietary pharmacy management system and refunding over $66 million.
“We corrected the error, reported the issue to the government and voluntarily refunded all overpayments,” Walgreens said in its statement to press.
Walgreens will receive a credit for the amount already refunded in its settlement, the DOJ said, and in recognition of its cooperation will not face any administrative action related to its participation in federal programs.
About $91.9 million of the settlement was recovered by the federal government while $14.9 million will be returned to individual states. The whistleblowers will also be receiving a portion of the recovery.
“Medicare enrollees, and consumers at-large, rely on pharmacies for critical medications that sustain their quality of life, and providers who prey upon public healthcare programs to increase profit margins must be held accountable,” Deputy Inspector General for Investigations Christian J. Schrank, of the Department of Health and Human Services Office of Inspector General, said in the announcement.
Walgreens pulled in $139 billion of total revenue across its fiscal 2023 but closed out that year with a loss of more than $3 billion—much of which came from settlements and defense costs related to opioid epidemic litigation.
Outside of legal and regulatory concerns, the pharmacy chain operator hasn’t been thrilled with its operating performance, either.
Walgreens has been undergoing a strategic review of its business, including the role of its retail pharmacy stores and its healthcare assets. It’s pulled back on and may even abandon its push into primary care as part of an aggressive cost-cutting strategy.