Walgreens has agreed to pay $300 million to settle allegations from federal prosecutors that it illegally filled millions of invalid prescriptions for opioids and other controlled substances, the Department of Justice (DOJ) announced Monday.
The DOJ also alleges that the retail pharmacy chain sought payment for many of those "invalid" prescriptions by Medicare and other federal healthcare programs in violation of the False Claims Act.
The settlement amount is based on Walgreens’s ability to pay, the DOJ said, but Walgreens will owe the U.S. an additional $50 million if the company is sold, merged or transferred prior to fiscal year 2032.
Private equity firm Sycamore Partners announced in early March that it planned to acquire Walgreens and take the company private in a deal valued at $10 billion.
Federal authorities allege that between August 2012 through March 1, 2023, Walgreens, one of the nation’s largest pharmacy chains, "knowingly filled millions of unlawful controlled substance prescriptions."
"These unlawful prescriptions included prescriptions for excessive quantities of opioids, opioid prescriptions filled significantly early, and prescriptions for the especially dangerous and abused combination of three drugs known as a 'trinity,'" the DOJ said in a press release.
Walgreens pharmacists allegedly filled these prescriptions despite clear red flags indicating a high likelihood that the prescriptions were invalid because they lacked a legitimate medical purpose or were not issued in the usual course of professional practice.
The DOJ announced the settlement along with the Drug Enforcement Administration (DEA) and the Department of Health and Human Services' Office of Inspector General (HHS OIG).
In a statement, Walgreens' spokesperson Fraser Engerman said, "We strongly disagree with the government’s legal theory and admit no liability. Our pharmacists are dedicated healthcare professionals who care deeply about patient safety and continue to play a critical role in providing education and resources to help combat opioid misuse and abuse across our country.
"This resolution allows us to close all opioid related litigation with federal, state, and local governments and provides us with favorable terms from a cashflow perspective while we focus on our turnaround strategy that will benefit our team members, patients, customers, and shareholders," Engerman said.
In a filing with the U.S. Securities and Exchange Commission on Friday, Walgreens said it entered into the settlement agreement to resolve the "last anticipated major opioid regulatory matter" and to avoid the cost and uncertainty of continued litigation.
The company will pay $300 million plus 4% interest annually over a six-year period under the terms of the agreement. Walgreens is required to pay $20 million plus interest within 21 days of the execution of the settlement.
The government’s complaint was filed Jan. 16 and amended April 18 in the U.S. District Court for the Northern District of Illinois.
According to federal authorities, Walgreens "pressured its pharmacists to fill prescriptions quickly and without taking the time needed to confirm that each prescription was lawful."
Walgreens’s compliance officials also allegedly ignored substantial evidence that its stores were dispensing unlawful prescriptions and even intentionally deprived its own pharmacists of crucial information, including by refusing to share internal data regarding prescribers with pharmacists and preventing pharmacists from warning one another about certain problematic prescribers, the DOJ alleges.
In light of Friday’s settlement, U.S. prosecutors moved to dismiss their complaint. Walgreens will also move to dismiss a related declaratory judgment action filed in U.S. District Court for the Eastern District of Texas.
The civil settlement resolves four cases brought under the qui tam, or whistleblower, provisions of the False Claims Act by former Walgreens employees. The act authorizes whistleblowers to sue on behalf of the U.S. and receive a share of any recovery.
The whistleblowers will collectively receive a 17.25% share of the government’s recovery.
“Pharmacies have a legal responsibility to prescribe controlled substances in a safe and professional manner, not dispense dangerous drugs just for profit,” said Attorney General Pam Bondi. “This Department of Justice is committed to ending the opioid crisis and holding bad actors accountable for their failure to protect patients from addiction.”
In addition to the financial penalty, Walgreens also entered into a seven-year agreement with the DEA to implement and maintain certain compliance measures and a five-year corporate integrity agreement with the HHS OIG. That agreement requires written policies and procedures, training, board oversight and periodic reporting to the HHS OIG related to Walgreens’s dispensing of controlled substances.
In February, a federal appeals court axed a $650 million judgment and corresponding injunction against CVS Pharmacy, Walgreens Boots Alliance and Walmart stemming from a lawsuit filed by two Ohio counties in 2018.