Walgreens To Pay $7.9 Million To Make Prescriptions Controversy Go Away

Walgreens owes a pretty penny to the U.S. Department of Justice, specifically, $7.9 million to make a little prescription controversy to go away. The government said Walgreens illegally tried to get federal health care beneficiaries to switch their prescriptions to Walgreens pharmacies.

Retail pharmacies aren’t supposed to go around trying win business from people who have prescriptions that are funded by the government, says the Associated Press (via the Chicago Tribune). The DOJ says Walgreens offered inducements like gift cards to people on programs like Medicare to switch over to Walgreens.

Although Walgreens had disclaimers in its ads that the offers of rewards for switching their prescriptions to one of its pharmacies didn’t include government programs, the DOJ says the company often ignored that and handed out gift cards willy nilly to anyone.

The whistle was blown on Walgreens by a former pharmacy technician it had employed and an independent pharmacist who sued the company. They’ll get $1.3 million of the settlement money.

Walgreens to pay $7.9 million to Justice Department [Associated Press]

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  1. Golfer Bob says:

    Well, this explains all those calls that came into our call center in the last several months from our Medicare clients who claimed they were told by Walgreens employees that Walgreens would no longer accept their Part C or Part D coverage.

  2. coldwatersrundeep says:

    In this day and age, anything goes to keep the bottom line in the black. Walgreens will just use the 7.9 fine as a write off, since it’s the cost of doing business.

    • Ivory Bill says:

      There are only very limited circumstances in which a business can deduct a civil penalty in computing taxable income. Walgreen’s may write it off as a drop in the bucket, but they can’t write it off on their taxes.

  3. StarKillerX says:

    My question to why is it illegal for pharmacies to try to win business from people whose prescriptions are paid for by the government?

    • AlteredBeast (Version 2.0) says:

      As a tax payer, I would like the government to be able to save money on something like this. It just makes sense.

      • Nigerian prince looking for business partner says:

        Wouldn’t the contract rates be the same, regardless of which pharmacy they’re used for?

      • StarKillerX says:

        This has nothing to do with saving money for the government, as not only do they pay the same no matter where people get their prescriptions fill but the rate they pay is set by the government itself.

    • Nigerian prince looking for business partner says:

      I was wondering the same thing. You would think a more severe punishment would be removing their in-network status. They’d lose a lot more than $7.9 million of that happened.

    • crispyduck13 says:

      I am also very confused by this.

    • Blueskylaw says:

      Because this is a gift to Big Pharma. The government didn’t negotiate discount rates with Big Pharma even though they are the largest drug buyer (I even get a discount if I but 2 containers of milk rather than one), so they might be afraid of pissing Big Pharma off if Walgreens sells drugs for cheaper, thereby cutting into Big Pharmas profits and reducing “donations” to politicians campaign funds.

      • StarKillerX says:

        Your obviously confused since the government doesn’t need to negotiate a better price as THEY set the price they will pay, and all other insurance does the same. Also they pay the same for a med at Walgreen as they do at CVS.

    • fortymegafonzies says:

      I don’t know exactly what happened here, but in general, the theory is that when you bribe someone to bring you their Medicare business, you’re creating a monetary incentive for people to overuse or misuse Medicare. If Walgreen’s pays people $20 for bringing in a Medicare prescription, patients can now actually make a profit from getting Medicare prescriptions written to them — which is not a good incentive to create.

      • FatLynn says:

        This comment is spot-on. I used to work for a medical device manufacturer, and there were very specific rules about what could/could not be said to someone on Medicare/aid

      • shepd says:

        Come for the gift cards, stay for the $$$CASH PAID$$$ diabetic test strips!

  4. Nigerian prince looking for business partner says:

    I wonder if there’s a certain level of desperation after the whole Express Scripts SNAFU.

    • GrandizerGo says:

      I hope they get everything they have coming to them. It serves them right.
      I now go to CVS, and have found the stores to have better prices, better displays, more items, generally a cleaner look, the pharmacists are faster and more polite. These observations are from Rite-AIds, CVS’s and Walgreens in MA and CT.
      I do not ever plan on shopping at a Walgreens again.

  5. CommonSense(ಠ_ಠ) says:

    I dont see the problem if they offered the gift cards to anyone not just the government programs.
    Whats wrong if fair competition is being used and customer get free gift cards to swtich no matter what insurance they have private or public??

    • GadgetsAlwaysFit says:

      Agreed. It would be different if it was only targeting government funded but they aren’t. I am pretty sure willy nilly, by definition, means you aren’t targeting or segregating.

    • catastrophegirl chooses not to fly says:

      there’s all kinds of wacky rules around medicare/federal payor systems.
      the company i work for [pharma] can give out free medication to people with no insurance, or help pay the copay of people with crappy insurance – but we can’t provide financial assistance for medicare

    • Christopher Wilson says:

      In NY/NJ they aren’t allowed to do the gift card thing for prescriptions for anyone. Same with earning points at rite aid from prescriptions. I never understood it.

  6. sirwired says:

    False Claims Act FTW. It’s such a fine law.

  7. balderdashed says:

    Apparently that penny wasn’t pretty enough. $7.9 million sounds like a lot, but Walgreens is the nation’s largest drug store chain, and in 2011 its sales totaled $72 billion. Thus, if the settlement had been 100 times that amount, it would have equalled about 1 percent of the company’s 2011 sales. When the cost of breaking the law and likelihood of getting caught exceeds the benefits, fewer companies will break the law. But does anybody believe that will happen, no matter which party controls Congress?

  8. crazydavythe1st says:

    Actually, many private insurance companies prohibit this as well for in-network pharmacies. The theory is that any gift cards being given to patients should really be cost savings that are passed on to the insurance plan since in the private insurance case prescription costs are often negotiated on a pharmacy by pharmacy basis.

    It will be interesting to see how much more Walgreens will be able to get away with this over time. Actually, I like Walgreens quite a bit. The most negative thing going against them is that in many cases it is easier to get prescriptions at the grocery store – make it a one stop shop kind of thing. I had a horrific experience with the pharmacist at my grocery store one time, so Walgreens is a nice alternative.