Walgreens will pay $100M to settle class-action lawsuit over generic drug prices

Walgreens has agreed to pay $100 million to settle a class-action lawsuit in which it was accused of overcharging for generic drugs. The settlement covers individuals or entities who paid for prescriptions at Walgreens using insurance between January 2007 and the present.

The lawsuit, which was filed in 2017, alleged that Walgreens required insured customers to pay more than members of its Prescription Savings Club. Members who paid an annual fee could purchase more than 500 widely prescribed generic drugs for $5, $10 and $15 for 30-day prescriptions, and $10, $20 and $30 for 90-day prescriptions without using insurance. Enrollment in the PSC required a yearly fee of $20 for individuals or $30 per family.

The complaint said that although Walgreens offered these lower prices to cash-paying customers, it charged more for the same drugs to customers using private insurance, Medicare or Medicaid. According to the plaintiffs, club prices should have been reported as its usual and customary prices. Instead, by reporting higher-than-club prices as usual and customary prices on reimbursement claims, Walgreens allegedly engaged in a hidden dual-pricing scheme.

Although insured customers reasonably believed that they would not pay more than customers who paid out of pocket, the lawsuit said, they did end up paying more in the form of copays and deductibles. Attorneys sought damages for insured customers nationwide since 2007, when the Prescription Savings Club began. As a part of the settlement, Walgreens agreed to terminate the club program.

Related: Walgreens to close 1,200 drugstores, in ‘turnaround’ after $3B loss

In a filing on Friday in federal court in Chicago, lawyers for the plaintiffs suing the drugstore chain sought approval for the settlement, calling it an “excellent result” for the class. Walgreens, however, denied liability and said the claim had no merit.

“We launched the prescription savings club more than 15 years ago to provide equitable access to lower-cost medications for uninsured and underinsured,” a company spokesperson told Becker’s Hospital Review. “This resolution allows us to focus on our turnaround strategy that will benefit our patients, customers, team members and shareholders.”

The settlement comes after Walgreens also agreed to pay $106.8 million in September to resolve allegations of submitting false billing claims to federal health care programs.

“This case highlights the scrutiny faced by large pharmacy chains over pricing practices and underscores the complexities surrounding insurance, out-of-pocket costs and the potential for disparities in drug pricing,” according to Lawyer Monthly.