United Food & Comm. Workers Unions v. Walgreen Co. U.S. Dist. Ct., N.D. Ill, Filed Jan. 11, 2012
Insurance companies, self-insured employers, and union health and welfare plans filed the class action in Illinois Federal Court alleging several RICO violations against Walgreen Co. and Par Pharmaceutical Co. for engaging in a scheme to overcharge for generic versions of Zantac and Prozac.
Walgreen and Par entered into a “health resource partnership” under which Par manufactured and marketed generic versions of the drugs Zantac and Prozac in dosage forms that were not currently subject to strict reimbursement limitations. The scheme boosted Walgreen’s profits by allegedly systematically and unlawfully filling customer’s prescriptions with the more expensive Par products instead of the inexpensive dosages that had been prescribed. Under the alleged scheme, Walgreen could bring in $80 million per year instead of the $5 million that the originally prescribed tablets would have netted it costing the third-party payers two to four times more.
The complaint alleges that “even though a pharmacy cannot legally change a prescription without a physician’s express authorization, Walgreens filled prescriptions written for low-priced 150-mg ranitidine tablets with much more expensive 150-mg ranitidine capsules manufactured by Par.” Further, Walgreens allegedly made the Par capsules the only form of generics readily available to its retail customers, despite the fact that it was dispensing a drug that was not legally substitutable for tablets. “Walgreens did not have a system to obtain physician or patient authorization for the drug switching, or even a system to notify the physician or patient that a different drug had been dispensed.”
This class action comes months after a similar whistleblower suit was unsealed in July 2011, thereby publicly revealing the details of the alleged schemes. Plaintiff insurers have reproduced documents from that suit in support of its complaint. Back in June 2008, Walgreen settled RICO allegations with the federal government, 42 states and Puerto Rico, by paying $35 million regarding allegations it had overcharged state Medicaid programs by filling prescriptions with the more expensive dosage forms.
The four count complaint seeks to represent thousands of third-party payers who paid for prescriptions from 2001 to 2006. The plaintiff’s seek compensatory damages, treble damages, prejudgment interest and attorney’s fees.
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