Walgreens to pay $50M to settle claims that it violated anti-kickback law

Jan. 20--Deerfield-based Walgreens has agreed to pay $50 million to the federal government and states to settle allegations that it illegally gave discounts to Medicare and Medicaid beneficiaries to encourage them to fill their prescriptions at Walgreens.

The federal anti-kickback statute prohibits giving anything of value to people covered by Medicare, Medicaid or Tricare in an effort to gain their business. The government alleged that Walgreens enrolled hundreds of thousands of those consumers into its Prescription Savings Club, which gave members discounts on drugs and rebates on other Walgreens-branded products such as household, baby care and grocery items.

Walgreens knew it could not allow beneficiaries of government health insurance programs into the Prescription Savings Club, and it published materials saying they were ineligible, according to the government. Yet Walgreens marketed the program to them and paid employees $1 to $5 for each customer enrolled without checking whether customers were covered by Medicare, Medicaid or TRICARE, the government alleged. Tricare is the government's health insurance program for the military.

Walgreens admitted that it enrolled people in government health insurance programs into its discount club as part of the settlement agreement announced Thursday by the U.S. attorney's office for the Southern District of New York.

"We entered into this agreement to avoid the delay, expense and uncertainty of litigation, and did so without any admission of legal liability," Walgreens said in a statement. "We continue to offer discounts on prescriptions through our Prescription Savings Club to eligible patients."

Walgreens has agreed to pay $46.2 million to the federal government and $3.79 million to states to settle allegations it violated state fraud laws.

Whistleblower Marc Baker, a former Florida Walgreens pharmacy manager, brought the lawsuit against Walgreens in 2012, and the government joined it. Under the federal False Claims Act, whistleblowers are entitled to a portion of whatever money the government is able to recover. Baker will get $9.7 million, according to the settlement agreement.

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