Allegations of drug substitution fraud, racketeering lead to class action lawsuit against Walgreens

Tuesday, January 17, 2012 by: Jonathan Benson, staff writer
Tags: Walgreens, lawsuit, fraud

(NaturalNews) Patients who had certain prescriptions filled at Walgreens between 1999 and 2006 may not have received the drugs they thought they did, or at the price they should have. A new class-action lawsuit accuses Walgreens of conspiring with generic drug-maker Par Pharmaceutical Co. to overcharge for certain generic drugs, and to substitute other more expensive drugs in place of what was actually prescribed.

Filed by the United Food and Commercial Workers Unions and Employers Midwest Health and Pension Fund, the lawsuit alleges that Walgreens violated federal racketeering laws by setting up special arrangements with Par to illegally substitute more expensive generic drugs in place of less expensive ones, which mutually boosted profits for both Walgreens and Par.

"Walgreens and Par engaged in at least two widespread schemes to overcharge insurance companies, self-insured employers and union health and welfare funds ... for the generic versions of Zantac, Prozac, and other drugs," says the suit.

"Walgreens purchased these dosage forms from Par -- at a cost substantially higher than the widely prescribed forms -- and systematically and unlawfully filled its customers' prescriptions with Par's more expensive products, rather than the inexpensive dosage forms that were prescribed by physicians."

While pharmacies like those operated by Walgreens cannot legally alter a patient's prescription outright, they can substitute higher-priced versions of those same drugs in place of less-expensive ones, at least in certain cases. But in this case, Walgreens allegedly conspired with Par to substitute its own capsule version of 150 milligram (mg) ranitidine, for instance, in place of less-expensive 150 mg ranitidine tablets, just for the purpose of boosting profits.

It is a win-win situation, in other words, for both Par and Walgreens. Par makes more profit from its higher-priced drugs, and Walgreens achieves a higher mark-up for those drugs. Customers, on the other hand, get stuck paying up to four times more for their drugs than they should.

The whole scheme was apparently devised by Par as a way to entice Walgreens and other pharmacies to avoid having to comply with Medicaid price limits on certain drugs. By switching capsules to tablets, or tablets to capsules, both parties were able to bypass the new rules using this loophole.

You can view a full copy of the lawsuit here:
http://www.wexlerwallace.com/wp.../2012-01-11-UFCW-Complaint.pdf

Sources for this article include:

http://www.reuters.com/article/2012/01/13/us-walgreen-idUSTRE80C0GC20120113