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Lawsuit Alleges Walgreens Inflated Cost of Generic Drugs

Similar to a lawsuit filed against CVS Health, a new lawsuit alleges Walgreens participated in a scheme with pharmacy benefit managers to increase drug costs.
Published Online: Aug 14,2017
Laurie Toich, Assistant Editor
A new lawsuit filed in the US District Court for the Northern District of Illinois alleges that Walgreens engaged in a scheme with pharmacy benefit managers (PBMs) to raise the cost of generic drugs for patients who were using their insurance. A similar lawsuit was filed by the same attorneys against CVS Health, alleging that the pharmacy engaged in a price scheme with PBMs.

However, Walgreens denies the allegations made in the suit.

"The complaint lacks merit and we will vigorously defend against the allegations,” Walgreens told The American Journal of Pharmacy Benefits in a statement.

The new lawsuit alleges that Walgreens charged patients high co-payments and then provided the excess payment to PBMs.

Plantiff David Grabstald said that in one instance, he paid $21.80 for a generic drug at Walgreens, but would have only paid $10 if he had bypassed his insurance. Grabstald reported that Walgreens never said that paying cash would lower his out-of-pocket costs so significantly. On separate instances, Grabstald said he overpaid between $5.48 and $11.80 for his prescription drugs.

The lawsuit claims that the silence of the pharmacists was the result of a scheme between the retailer and large PBMs to increase profits. The alleged scheme was said to lower costs for the PBMs and increase prescriptions filled at the pharmacies.

“The linchpin of the scheme is that the consumer pays the amount negotiated between the PBM and Walgreens even if that amount exceeds the price of the drug without insurance,” the lawsuit states.

The suit also alleges that Walgreens is collecting co-pays that exceed profits, which are then given to PBMs.

For example, Grabstald also said that he paid $17.74 for a drug using insurance, while the cash price was $10. The plaintiff said that he expected the insurer was paying nearly $71 with his 20% co-pay; however, this was not the case, according to the lawsuit.

The lawsuit claims that Walgreens entered into the contracts with PBMs to gain profits, rather than serve their customers.

Under the Employee Retirement Income Security Act of 174, Walgreens has a fiduciary duty to provide services in the interest of their customers, according to the suit.
The lawsuit reports that more than 100 Walgreens customers overpaid the pharmacy by more than $5 million.

The plaintiffs are requesting an order that prohibits Walgreens from continuing the alleged scheme; costs, restitution, damages, and disgorgements; treble damages and attorneys’ fees; pre- and post-judgement interest at the maximum rates; and other relief to be determined by the court.