Walgreens Settles Allegations Of Fraudulent Billing With DOJ

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Dive Brief:

• Walgreens has agreed to pay almost $107 million to settle allegations that it fraudulently billed government programs for prescriptions that its pharmacies never dispensed, the Department of Justice announced Friday.
• From 2009 to 2020, Walgreens submitted claims for payment to Medicare, Medicaid and other federal healthcare programs for prescriptions it processed but were never picked up by patients, raking in “tens of millions of dollars” in improper payments, according to the DOJ.
• Walgreens, which has already refunded the overpayments, blamed an electronic system error for the overbilling. The company did not have to admit liability as part of the settlement.

Dive Insight:

“Due to a software error, we inadvertently billed some government health care programs for a relatively small number of prescriptions our patients submitted but never picked up,” a Walgreens spokesperson said. “We corrected the error, reported the issue to the government and voluntarily refunded all overpayments.”

The settlement amount took Walgreens’ cooperation into account, along with its steps to update its in-house pharmacy management system to prevent the issue from reoccurring, the DOJ said. The payout resolves three cases pending in New Mexico, Texas and Florida filed by whistleblowers alleging violations of the False Claims Act.

The $106.8 million settlement amounts to a slap on the wrist for Deerfield, Illinois-based Walgreens. The company, which operates one of the largest retail pharmacy chains in the U.S., with thousands of stores, brought in upwards of $139 billion in revenue in its 2023 fiscal year. However, the payout adds to the company’s ongoing financial woes. Walgreens reported net loss of $3.1 billion last year, mostly driven by massive payouts to settle claims over the drug chain’s role in the opioid epidemic.

The company has also struggled with shaky reimbursement for dispensing prescriptions, flagging front-of-store sales and an unsuccessful pivot to providing health services that’s saddled Walgreens with an unprofitable primary care chain.

Walgreens operated 8,700 stores in the U.S. as of last summer, but has since taken steps to close a number of underperforming locations as part of a larger effort to cut costs. Walgreens has also been divesting assets, including shares in drug distributor Cencora, and plans to sell some or all of its stake in medical group VillageMD.

Shares in Walgreens are down more than 66% year to date.