Retail pharmacy giant Walgreen Co. will pay $60 million to settle claims that it overcharged Medicaid for prescription drugs. The alleged scheme was brought forward in a whistleblower lawsuit filed in 2012. This is the second settlement in that case, which involves alleged fraud against 39 states and the federal government.
The whistleblower, Marc Baker, was once a Walgreens pharmacy manager in Florida. Due to the nature of his work for the company, Baker was in a position to witness how the pharmacy chain knowingly offered illegal kickbacks to lure Medicaid-covered patients and overcharged government programs for prescription drugs. In January 2017, there was a first settlement relating to some of Baker´s allegations. As a result of that agreement, he received a $9.7 million whistleblower award. Now, following the new resolution, he stands to get an additional $12.6 million.
Upon the announcement of the settlement, a spokesperson for Baker commented, “This unprecedented case exemplifies the importance of whistleblowers in the public-private partnership to prevent government fraud. It illustrates the power of one individual to expose and stop fraud against the government – and, ultimately, U.S. taxpayers who foot the bill.”
Both federal and state laws establish that no prescription drug provider can charge Medicaid (and other healthcare programs) more than the ‘customary’ price for any given drug. According to the whistleblower and the prosecutors in the case, Walgreens inflated drug prices when billing the government programs. This led to substantial, and allegedly unlawful, profits for the company
As part of the settlement agreement, the defendant admitted that the government “paid Walgreens more money in reimbursements than they would have paid if Walgreens had identified its PSC prices as its [usual and customary] prices.”
The PSC was a special program by which Walgreens offered drugs to customers at discount prices, which were substantially higher when it was the government that was footing the bill.
Under the False Claims Act, whistleblowers can report fraud against the government through confidential lawsuits. The FCA also offers numerous anti-retaliation protections for people with original information about fraud, aside from a share in any recoveries resulting from their claims, which can go as high as 30 percent.
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