Attorney General Frosh Announces $60 Million Settlement with Walgreens to Resolve Medicaid False Claims Act Allegations

News Release, Office of the Maryland Attorney General

BALTIMORE, MD (January 25, 2019) – Maryland Attorney General Brian E. Frosh announced today that Maryland has joined the federal government, 32 other states, and the District of Columbia in reaching a $60 million settlement with Walgreen Co. (Walgreens) to settle allegations that Walgreens violated the False Claims Act by billing Medicaid at higher rate than its usual and customary (U&C) rates.

This settlement resolves allegations relating to the Prescription Savings Club (PSC), Walgreens’ discount drug program. Medicaid sets reimbursement rates based in part on the lowest reported (U&C) price that drug providers charge customers. An investigation revealed that Walgreens reported prices for certain drugs sold through its PSC program that were higher than what it actually charged customers for those drugs. By fraudulently inflating the prices, Walgreens’ allegedly obtained more money in reimbursement from Medicaid than it was entitled to receive. The Maryland Medicaid program will receive $131,675.76 in this settlement.

“Walgreens made false claims to Medicaid. The money they received should have gone to help sick people,” said Attorney General Frosh. “We encourage anyone with knowledge of people trying to cheat the state to get in touch with our office.”

A whistleblower action regarding these allegations was originally filed in 2012 in the United States District Court for the Southern District of New York under the federal False Claims Act and the plaintiff states’ respective false claims statutes. The National Association of Medicaid Fraud Control Units team conducted an investigation and participated in settlement negotiations with Walgreens on behalf of the states. Representatives from the Attorneys General Offices of California, Illinois, Indiana, Michigan, New York, and Ohio also participated in the settlement negotiations.

In making today’s announcement, Attorney General Frosh thanked the state Medicaid Fraud Control Unit for its work in this case, specifically Assistant Attorney General Raja Mishra and Chief Auditor Ruth Jarrell.

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