A National Retail Pharmacy Chain Settles FCA Allegations with a Landmark Payout

Alerts / January 30, 2019

The U.S. Department of Justice (DOJ) recently announced that a national retail pharmacy chain agreed to settle two whistleblower lawsuits for unprecedented amounts. Both lawsuits emerged out of allegations that the pharmacy chain overbilled federal healthcare programs. In the first settlement, the pharmacy chain agreed to pay $209 million to resolve allegations of improperly billing Medicare, Medicaid and other federal programs from 2006 to 2017 for hundreds of thousands of insulin pens that the pharmacy chain dispensed to patients prematurely. Federal healthcare programs typically denied these claims for insulin pens when the reported “days of supply” for a full carton of pens exceeded the program’s limit. In such instances, the pharmacy chain’s practice was to dispense and bill for the full carton of insulin pens and reduce the reported days-of-supply data to conform to the federal healthcare program’s supply limit. The pharmacy chain repeatedly reported to federal healthcare programs days-of-supply data that was lower than the appropriate value calculated according to the standard pharmacy billing formula. The allegations were brought to the DOJ’s attention by two qui tam relators who were former pharmacists with the chain – both relators filed federal and state False Claims Act lawsuits against the pharmacy chain.

In the second settlement, the pharmacy chain agreed to pay $60 million to resolve allegations of obtaining excessive reimbursements between 2012 and 2017 through the chain’s prescription drug savings program. Under federal and state reimbursement laws, the amount charged by a pharmacy for a prescription drug cannot exceed the drug’s “usual and customary” price. The pharmacy chain’s prescription drug savings program offered discounted prices on prescription drugs to both the public and government healthcare program beneficiaries but charged significantly higher prices for the same drugs when they were paid for by government programs. The relators, and subsequently the DOJ, alleged that the pharmacy chain fraudulently increased its reimbursements by submitting inflated usual and customary prices to government healthcare plans. The pharmacy chain agreed to pay an additional $60 million for its failure to seek Medicaid reimbursement under the usual and customary price for various drugs as required by law.

According to the settlement agreements, the retail pharmacy chain acknowledged and accepted responsibility for the conduct alleged by the relators and the DOJ. The pharmacy chain also entered into a corporate integrity agreement with the Office of the Inspector General for the U.S. Department of Health and Human Services that builds on the chain’s already existing compliance program.

Authorship Credit: Charlene L. McGinty.

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