Walgreens Is Latest Target in Drug Price Inflation Lawsuits

Aug. 9, 2017, 10:12 PM

By Jacklyn Wille, Bloomberg BNA

Walgreens Boots Alliance Inc. participates in a fraudulent scheme to inflate generic drug prices and overcharge patients, a new proposed class action alleges.

The lawsuit, filed Aug. 9 in federal court, comes two days after similar allegations were levied against CVS Health Corp.

The pharmacies are accused of charging customers with health insurance more for generic drugs than they would pay without insurance. The customer suing Walgreens says he was required to pay nearly $22 for a drug that would have cost him only $10 had he paid cash.

Health insurers UnitedHealth Group, Cigna Corp., and Humana have been hit with similar class actions in the past year. The lawsuits are partly a response to an investigation into health insurance clawbacks aired by New Orleans television station Fox 8 beginning in 2016.

When a given prescription drug costs less than a patient’s copayment amount, insurers work with pharmacy benefit managers to “claw back” the difference through an improper scheme kept hidden from patients, according to the lawsuits. This causes some insured patients to pay more for prescription drugs than if they lacked insurance, the lawsuits claim.

The lawsuit against Walgreens implicates—but doesn’t name as defendants—several pharmacy benefit managers that contract with the company, including CVS Caremark, Express Scripts, Prime Therapeutics, OptumRx, and MedImpact.

“The complaint lacks merit and we will vigorously defend against the allegations,” a Walgreens spokesman told Bloomberg BNA. CVS called the allegations “baseless” and “built on a false premise.”

Both Walgreens and CVS are accused of letting customers think they’re getting fair prices on prescription drugs while remaining silent about the scheme. The pharmacies profit from the scheme in part because it drives patients into their retail stores, where they buy additional products, according to the lawsuits.

The lawsuit against Walgreens was filed in the U.S. District Court for the Northern District of Illinois by Hagens Berman Sobol Shapiro LLP and Stanley Law Group. This legal team, along with McIntyre Tate LLP, also represents the customer suing CVS.

The case is: Grabstald v. Walgreens Boots All., Inc., N.D. Ill., No. 1:17-cv-05789, complaint filed8/9/17

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

To read more articles log in.

Learn more about a Bloomberg Law subscription.