AG to Walgreens: Medicaid fraud will ‘never be tolerated’

January 23, 2019 By Jonathan Sperling Brooklyn Daily Eagle

New York Attorney General Letitia James. AP Photo/Seth Wenig

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New York Attorney General Letitia James blasted pharmacy giant Walgreens on Tuesday after announcing two multimillion-dollar settlements related to the corporation’s alleged Medicaid Program fraud.

New York state joined the federal government and other states in reaching a nationwide $209.2 million settlement with Walgreens after claims that the company over-dispensed insulin pens to Medicaid beneficiaries at its pharmacies. James subsequently announced an $8 million settlement in principle with Walgreens for allegations that it violated the False Claims Act.

“Cheating our state’s Medicaid program will never be tolerated by this office,” said James. “We will continue to root out illegal practices that increase costs of health care and medication for all New York Medicaid recipients and will hold accountable any provider that engages in these deceptive practices.”

Walgreens allegedly dispensed insulin pens in boxes containing five pens, regardless of the patient’s needs and ignoring the dosage guidelines given by doctors, according to the settlement. Thus, Medicare and Medicaid beneficiaries were routinely receiving more insulin than prescribed, paving the way for Walgreens to bill Medicaid for the additional doses.

Walgreens has 8,309 store locations nationwide, including dozens of Walgreens and Duane Reade pharmacies in Brooklyn and Queens.

“My office will continue to investigate and stop unlawful practices that hurt New York state’s Medicaid Program,” said James. “We will never let companies get away with illegally billing Medicaid with inflated amounts for prescription drugs.”

Walgreens admitted that between January 2006 and December 2017, state Medicaid programs would deny a claim from Walgreens because the reported days of supply for a full carton of five insulin pens exceeded the Medicaid program’s days of supply limit. When this would occur, it was the corporation’s practice to dispense and bill for a full carton of insulin pens and reduce the reported days of supply to conform to the Medicaid program’s days of supply limit.

New York state’s own Medicaid program paid an average of approximately $425 per box of five insulin pens to pharmacies on behalf of Medicaid beneficiaries, according to James.

Under the first settlement, Walgreens will pay the U.S. and the states $209.2 million dollars. Of this amount, $89,185,625.10 will go to state Medicaid programs to resolve allegations that Walgreens’ over-dispensing of insulin pens caused false claims to be submitted to Medicaid healthcare programs. New York state will receive $6,548,679.82 of this amount in restitution.

In a second settlement, Walgreens is alleged to have submitted claims to the states’ Medicaid programs in which it identified its “usual and customary rates” for certain prescription drugs sold through its discount drug program as higher than the price Walgreens actually charged for those drugs. As part of that settlement, New York Medicaid will receive over $8 million in restitution and other recoveries, according to James.