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$25 gift card to transfer prescriptions cost Walgreens $7.9M

by | Apr 23, 2012 | Firm News

Walgreens, an Illinois-based corporation operating a national retail pharmacy chain, has paid the United States and participating states $7.9 million to resolve allegations that Walgreens violated the False Claims Act, the Justice Department announced today.

The settlement resolves allegations that Walgreens offered illegal inducements to beneficiaries of government health care programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program (FEHBP), in the form of gift cards, gift checks and other similar promotions that are prohibited by law, to transfer their prescriptions to Walgreens pharmacies. The government investigation alleged that Walgreens had offered government health beneficiaries $25 gift cards when they transferred a prescription from another pharmacy to Walgreens. The company’s advertisements that promoted gift cards and gift checks for transferred prescriptions typically acknowledged that the offer was not valid with Medicaid, Medicare or any other government program. Nevertheless, the government alleged that Walgreens employees frequently ignored the stated exemptions on the face of the coupons and handed gift cards to customers who were beneficiaries of government health programs, in violation of federal law.

“This case represents the government’s strong commitment to pursuing improper practices in the retail pharmacy industry that have the effect of manipulating patient decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.

The allegations were brought to the government by two whistleblowers, known as relators, in two separate whistleblower lawsuits filed under the

“This case vindicates and protects the interests of consumers throughout the nation by ensuring that they remain free from undue influence by large retail chains when making decisions about which pharmacies to entrust their own individual health care,” said André Birotte Jr, U.S. Attorney for Central District of California.

“The law prohibits pharmacies from using their retail clout to lure patients whose prescriptions are subsidized by the government,” said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. “Continuity with a pharmacist is important to detect problems

with dosages and drug interactions. Patients should make decisions based on legitimate health care needs, not on inducements like gift cards.”

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