Rite Aid Class Action: Insured Customers Overcharged for Generic Drugs

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Rite Aid is using a dual-pricing scheme to get higher copays out of insured generic drug purchasers, according to a California customer.

Plaintiff Robert Josten says Rite Aid has been reporting artificially higher prices for certain generic drugs to private and government insurance programs.

As a result, he claims, Rite Aid customers who use their insurance to cover their drug purchases pay a higher copay than they should have to.

According to this Rite Aid class action lawsuit, pharmacies are required to use their “usual and customary” price for drugs when charging customers or reporting to a third-party payor.

Josten says Rite Aid dodges this requirement through its use of a discount program called the Rx Savings Program. He argues the lower generic drug prices available under this program are Rite Aid’s true usual and customary prices, on which sales to insurance-paying customers should be based.

Instead, Rite Aid charges its insured customers based on a higher price, which Josten argues is artificially inflated. The pharmacy reports the higher price to the insurer, and the customer ends up paying a higher copay. Josten says these artificially heightened prices cause customers to pay more than they should have to, allowing Rite Aid to collect inflated copays, coinsurance or deductible amounts.

The Rx Savings Program allows cash-paying customers to pay flat rates for any of 350 commonly prescribed generic drugs. Qualifying drugs are selected by Rite Aid. Customers can get a 30-day supply for $9.99 and a 90-day supply for $15.99.

While any customer can participate in the Rx Savings Plan, Rite Aid does not actively promote it, according to Josten’s complaint. Pharmacists sometimes tell uninsured customers about the program on a case-by-case basis, Josten claims.

But customers who pay for their drugs using insurance are allegedly never told about it. Josten says Rite Aid keeps these customers in the dark about the fact that they are being overcharged for copays.

Josten says he has made many purchases of generic medications from Rite Aid since 2014, paid for using Medicare Advantage coverage provided through Blue Shield of California.

The prices he paid with insurance were not only artificially inflated but also higher than the price he would have paid under the Rx Savings Program. Josten says he overpaid by more than $20 in purchases made between September 2016 and February 2017.

Josten seeks to represent a plaintiff Class that would include all persons in the U.S. and its territories who, within the applicable limitations period, paid some or all of the purchase price for generic drugs listed in the Rite Aid Rx Savings Program formulary, purchased for their own consumption or that of their families, members, employees, insureds, participants or beneficiaries.

He seeks a court injunction barring Rite Aid from continuing the allegedly deceptive pricing practice. He also asks for an award of damages, restitution and disgorgement of related revenues, and reimbursement of costs and attorneys’ fees, all with pre- and post-judgment interest.

Josten is represented by attorneys Walter W. Noss, Joseph P. Guglielmo and Erin Green Comite of Scott+Scott Attorneys at Law LLP, and by Alfred G. Yates Jr. of Law Office of Alfred G. Yates Jr. PC.

The Rite Aid Generic Drugs Overcharge Class Action Lawsuit is Josten v. Rite Aid Corp., Case No. 3:18-cv-00152-JLS-JLB, in the U.S. District Court for the Southern District of California.

UPDATE: On March 16, 2018, Rite Aid is trying to get a class action lawsuit claiming the pharmacy hikes drug prices for insured customers dismissed.