Walgreens settles $100 million class action lawsuit over drug overcharges

Walgreens settles class action lawsuit over overpriced generic drugs

Walgreens has agreed to pay $100 million to settle a proposed class action lawsuit alleging the company overcharged its insured customers for generic drugs over a decade. The lawsuit alleged that Walgreens routinely charged its insured customers higher prices than members of its Prescription Savings Club, which offered significantly reduced prices on common generic drugs 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 small annual fee for access to low-priced generic drugs. Specifically, the savings club provided access to over 500 commonly prescribed generic medications at $5, $10, and $15 for 30-day supplies and $10, $20, and $30 for 90-day supplies. These prices were only available to customers who paid out of pocket without purchasing insurance, creating a disparity that plaintiffs contend was unfair to insured individuals.

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In a lawsuit filed last Friday, plaintiffs' lawyers sought court approval of the settlement, hailing it as an “excellent outcome” for affected customers. However, a Walgreens spokesperson said, “We assume no liability and believe these allegations were never substantiated.” This resolution allows us to focus on our turnaround strategy that benefits our patients, customers, team members and shareholders. “

Allegations of excessive reimbursement rates

The lawsuit alleged that Walgreens represented its savings club prices as “usual and customary” rates while allegedly submitting inflated prices to insurers for reimbursement. This discrepancy meant that those with insurance often paid more copayments and deductibles than those who bought medications directly through the savings club. The lawsuit argued that insured customers had a reasonable expectation that they would not be charged more than self-payers, but had incurred higher costs.

The class action sought to recover damages for insured customers affected by these pricing practices for purchases made in 2007, the year Walgreens launched its Prescription Savings Club. In August, Walgreens dissolved 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 of Robbins Geller Rudman & Dowd and Joseph Guglielmo of Scott + Scott, among others. The Walgreens defense team includes Selina Coleman and Michael Scott Leib of Reed Smith.

The proposed settlement is subject to court approval, which, if granted, will end years of litigation and provide financial redress to customers who were allegedly overcharged. This case highlights the intense scrutiny large pharmacy chains face regarding their pricing practices and highlights the complexities surrounding insurance, out-of-pocket costs, and the possibility of drug pricing differences.

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