Walgreens pays nearly $8 million to settle kickback allegations

by Ben Vernia | April 21st, 2012

On April 20, the Department of Justice announced that the pharmacy chain Walgreens had paid nearly $8 million to settle whistleblowers’ claims that the company used gift cards to induce patients to use its services, in violation of the Medicare Antikickback Statute. According to DOJ’s press release:

Walgreens, an Illinois-based corporation operating a national retail pharmacy chain, has paid the United States and participating states $7.9 million to resolve allegations that Walgreens violated the False Claims Act, the Justice Department announced today.

The settlement resolves allegations that Walgreens offered illegal inducements to beneficiaries of government health care programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program (FEHBP), in the form of gift cards, gift checks and other similar promotions that are prohibited by law, to transfer their prescriptions to Walgreens pharmacies. The government investigation alleged that Walgreens had offered government health beneficiaries $25 gift cards when they transferred a prescription from another pharmacy to Walgreens. The company’s advertisements that promoted gift cards and gift checks for transferred prescriptions typically acknowledged that the offer was not valid with Medicaid, Medicare or any other government program. Nevertheless, the government alleged that Walgreens employees frequently ignored the stated exemptions on the face of the coupons and handed gift cards to customers who were beneficiaries of government health programs, in violation of federal law.

The government announced that two relators will share nearly $1.3 million of the approximately $7.3 million the federal government will receive from the settlement (a 17.5% relators’ share).

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