Walgreens Settles Investigations Related to Medicaid Reimbursements

Illinois-based Walgreens has agreed to pay the federal government, 42 states and Puerto Rico $35 million related to a dispute over Medicaid reimbursements for three generic drugs the company dispensed at its pharmacies.

The settlement covers Walgreens’ Medicaid reimbursement claims between July 2001 and 2005 for generic versions of Zantac (ranitidine HCl), Prozac (fluozetine HCl) and Eldepryl (Selegiline HCl). It is similar to settlements over Medicaid claims by national pharmacies in which CVS Caremark paid $36.7 million in March and Omnicare paid $49.5 million in November 2006, according to the U.S. district attorney for the Northern District of Illinois.

Walgreens allegedly switched versions of prescribed drugs — substituting tablets for capsules and vice versa — to increase profits, according to the Illinois U.S. district attorney.

Under the agreement, Walgreens will pay the U.S. government nearly $18.6 million as the federal share of the settlement and roughly $16.4 million to participating state Medicaid programs.

Pharmacist Bernard Lisitza, who initiated the case by filing a separate lawsuit, will receive a share of the settlement from both the federal government and states that have their own whistle-blower statutes.

The company has signed a five-year corporate integrity agreement with the Office of Inspector General of the HHS under which it will maintain its existing compliance measures and implement new policies and procedures regarding medication interchange.