Walgreens Settles Class Action Lawsuit Over Generic Drug Overcharges
Walgreens has agreed to pay $100 million to settle a proposed class action lawsuit alleging that it overcharged insured customers for generic drugs over a decade. The lawsuit claimed that Walgreens routinely charged insured customers higher prices than those available to members of its Prescription Savings Club, which offered significantly reduced prices for common generics without requiring insurance.
The class action lawsuit, filed in Chicago, argued that Walgreens’ insured customers paid more than Prescription Savings Club members, who paid only a nominal annual fee to access generic drugs at low prices. Specifically, the savings club provided access to over 500 widely prescribed generics at $5, $10, and $15 for 30-day supplies and $10, $20, and $30 for 90-day supplies. These prices were available only to customers paying out of pocket without using insurance, creating a disparity that the plaintiffs claimed was unjust for insured individuals.
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In a filing last Friday, attorneys for the plaintiffs sought court approval for the settlement, hailing it as an “excellent result” for affected customers. A spokesperson for Walgreens, however, stated, “We admit no liability and believe these claims never had any merit. This resolution allows us to focus on our turnaround strategy that will benefit our patients, customers, team members, and shareholders.”
Allegations of Inflated Reimbursement Rates
The lawsuit contended that Walgreens represented its savings club prices as the “usual and customary” rates, while allegedly submitting inflated prices to insurers for reimbursement. This discrepancy meant that insured customers often paid more in copays and deductibles than those who purchased medications directly through the savings club. The suit argued that insured customers reasonably expected not to be charged more than out-of-pocket payers, yet they incurred higher costs.
The class action aimed to provide compensation for insured customers affected by these pricing practices, seeking damages for purchases dating back to 2007, the year Walgreens launched its Prescription Savings Club. In August, Walgreens discontinued the savings club as part of the settlement terms.
Legal Representation and Case Details
The case, known as Russo et al v. Walgreen Co., is filed in the U.S. District Court for the Eastern District of Illinois under case number 1:17-cv-02246. The plaintiffs are represented by attorneys Paul Geller from Robbins Geller Rudman & Dowd and Joseph Guglielmo from Scott + Scott, among others. Walgreens’ defense team includes Selina Coleman and Michael Scott Leib from Reed Smith.
The proposed settlement is pending court approval, which, if granted, will conclude years of litigation and provide financial redress to customers who were allegedly overcharged. This case highlights the scrutiny faced by large pharmacy chains over pricing practices and underscores the complexities surrounding insurance, out-of-pocket costs, and the potential for disparities in drug pricing.
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