Walgreens To Pay Humana $360M To Settle Drug Pricing Dispute

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Dive Brief:

• Walgreens has agreed to pay Humana $360 million to settle a lawsuit accusing the pharmacy giant of overcharging for prescription drugs for over a decade.
• Humana first targeted Walgreens over allegedly inflating reimbursement claims in 2019, eventually winning $642 million in private arbitration. Walgreens sued Humana in 2022 to overturn the award.
• A Washington, D.C. judge dismissed the lawsuit on Friday after Walgreens disclosed the settlement in a filing with the Securities and Exchange Commission.

Dive Insight:

Walgreens and Humana have been duking it out in the courts for half a decade over a drug reimbursement dispute stemming from Walgreens’ pharmacy savings club, which is meant to give un- and underinsured people access to cheaper drugs.

Humana argues Walgreens offered deep discounts on drugs to customers through the program without reporting those sales in its usual and customary prices to insurers, thereby inflating claims.

Walgreens has denied any wrongdoing, saying its contracts with Humana require it to report standard retail prices, not special rates available only to members of a fee-based club. The Illinois-based company argued the arbiter in the case didn’t properly interpret those contracts, and that they were not impartial due to financial ties with Humana’s legal team.

As such, Walgreens slammed the “staggering” $642 million award as “a miscarriage of justice” in a petition with the court last year. Walgreens is also suing that legal team, the law firm of Crowell & Moring, in an ongoing case.

Walgreens asked the federal court to vacate the award entirely but reentered arbitration with Humana during the case, ultimately agreeing to pay $360 million.

The Illinois-based retailer paid $150 million of the settlement in December, according to the SEC filing.

Despite achieving a more favorable Humana settlement, Walgreens is still defending itself against a number of suits claiming it inflated prescription drug claims, including one from a group of Blue Cross Blue Shield plans.

The retail pharmacy chain has been struck with a number of expensive settlements over the past few years, including a number with states over Walgreens’ role in the opioid epidemic that total billions of dollars. The settlements haven’t helped Walgreens’ worsening financial health, though analysts have said the company’s new management team seem to have a clearer idea of how to drive growth coming into 2024.