Walgreen agrees to pay $35 million to settle allegations of improper medication switches for Medicaid beneficiaries

Walgreen has agreed to pay $35 million to settle allegations that the company improperly switched the form of generic medications prescribed to Medicaid beneficiaries to receive higher reimbursements from the program, the Hartford Courant reports (Levick, Hartford Courant, 6/5).

The allegations resulted from a lawsuit filed in 2003 in U.S. District Court for Northern Illinois by independent pharmacist Bernard Lisitza. Forty-two states; Washington, D.C.; Puerto Rico; and the federal government later joined the lawsuit. According to the lawsuit, Walgreen switched Medicaid beneficiaries from the tablet form to the more expensive capsule form of generic versions of the heartburn medication Zantac, the antidepressant Prozac and the Parkinson's disease treatment Eldepryl (Won Tesoriero, Wall Street Journal, 6/5).

Under the settlement, Walgreen will pay the states; Washington, D.C.; and Puerto Rico about $16.4 million under separate agreements and pay the federal government about $18.6 million (Parmely, Philadelphia Inquirer, 6/5). Walgreen also will increase compliance training for many employees as part of a five-year agreement with the federal government (Wall Street Journal, 6/5). Lisitza will receive about $5 million under the settlement. Walgreen denied any wrongdoing in the settlement (Philadelphia Inquirer, 6/5).

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Patrick Fitzgerald, U.S. attorney for the Northern District of Illinois, said, "Switching between tablets and capsules to deliver medications might seem harmless, but when that is done solely to increase profit and in violation of federal and state regulations that are designed to protect patients, pharmacists must know that they are subjecting themselves to the possibility of triple damages, civil penalties and legal fees" (Jones, Chicago Tribune, 6/5). Gregory Katsas, acting assistant attorney general for the Civil Division of the Justice Department, said, "The United States will not tolerate pharmacies or any other health care providers that attempt to manipulate the Medicaid program at the taxpayers' expense" (Knowles, Chicago Sun-Times, 6/5).

Walgreen officials said that the company "believes the reimbursements it received from Medicaid were consistent with applicable regulations" and agreed to the settlement to "avoid the expense and uncertainty of litigation and to resolve all of the governments' claims" (Wall Street Journal, 6/5).