Walgreens Class Action: Customers Overcharged for Generic Prescriptions

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A California woman says Walgreens has been overcharging customers for purchases of generic drugs that are covered by health insurance.

Plaintiff Dawn Cobbs claims defendant Walgreens has been surreptitiously inflating the prices it charges for generic prescription drugs when the purchases of those drugs are covered in part by third-party insurers. She says that by charging more than its “usual and customary” price for these drugs, Walgreens is in violation of applicable consumer protection laws.

The resulting overcharge causes the customer to pay a higher copay than they should have had to pay, she claims.

According to this Walgreens class action lawsuit, the source of the price disparity is the Walgreens Prescription Savings Club. This club is a discount program that Walgreens offers to customers who pay out-of-pocket for their medications instead of using insurance coverage.

Under the Prescription Savings Club, customers can purchase any of 500 of the most commonly prescribed medications according to a tiered pricing schedule. Pricing under that schedule runs from $5 to $30, depending on the type of drug and the number of days’ supply purchased.

Cobbs says that Walgreens does not impose any particular restrictions on customers’ use of the Prescription Savings Club, other than to require club members to pay cash and to withhold membership from Medicare and Medicaid beneficiaries.

Therefore, Cobbs argues, the price Walgreens charges club members is its “usual and customary price” that the company is legally obligated to charge all customers for those drugs.

The plaintiff says that by billing insurance companies at a higher rate for these drugs, Walgreens is submitting falsely inflated “usual and customary” prices. As a result of that alleged inflation, the customer who buys these drugs ends up paying an unnecessarily higher copay, she claims.

“Thus, using the PSC as its vehicle, Walgreens has effectively created a discriminatory pricing scheme, whereby customers enrolled in the PSC who are not using insurance when purchasing a prescription generic drug are able to pay the lower PSC Price, while those customers using insurance must pay the higher and artificially inflated ‘usual and customary’ price,” the complaint reads.

Cobbs’ claims echo those brought earlier this year in another Walgreens class action lawsuit. Four plaintiffs, including the International Brotherhood of Electrical Workers Local 38 Health and Welfare Fund, alleged that Walgreens is using the Prescription Savings Fund to skirt laws that govern how much the pharmacy can charge for insurance-covered medications.

Cobbs proposes a plaintiff Class to include all persons in the U.S. who, between January 2007 and the present, paid either in full or in part for a prescription drug on the Prescription Savings Club formulary and were insured for that purchase through a third-party company.

She is asking the court for an injunction barring Walgreens from continuing the practices at issue here. She also seeks an award of damages, restitution or disgorgement to cover the difference between the copay paid by Class Members and the “usual and customary” price for their drugs, plus an award of court costs and attorneys’ fees.

Cobbs is represented by attorneys George C. Aguilar, Gregory E. Del Gaizo and Steven M. McKany of Robbins Arroyo LLP, and by David W. Mitchell, Brian O. O’Mara, Arthur L. Shingler III, Mark J. Dearman, Stuart A. Davidson and Jason H. Alperstein of Robbins Geller Rudman & Dowd LLP.

The Walgreens Generic Drugs Overcharge Class Action Lawsuit is Dawn Cobbs v. Walgreen Co. and Walgreen Boots Alliance, Case No. 3:17-cv-01089, in the U.S. District Court for the Southern District of California.