Walgreens Class Action Says Pharmacy Overcharges for Generic Drugs

Walgreen Co. and Walgreens Boots Alliance Inc. are facing a class action lawsuit that alleges the drug stores engage in a fraudulent and deceptive scheme to artificially inflate the prices of certain generic prescription drugs.

According to the Walgreens class action lawsuit, which was filed last week by plaintiffs Dorothy Forth, Troy Termine, Cynthia Russo and the International Brotherhood of Electrical Workers Local 38 Health and Welfare Fund (a third-party payor), nearly 90 percent of Americans are enrolled in health insurance plans that cover medical and prescription drug benefits.

An appealing feature of these insurance plans is that the consumer will share the cost of prescription drugs with a third-party payor. To help control their prescription drug costs, many third-party payors require consumers to buy generic drugs when possible because generic drugs are often sold at far lower prices than brand-name drugs, the Walgreens class action lawsuit states.

As a result, many consumers choose to purchase generic drugs over more expensive brand-name drugs because they typically save money by paying a lower copayment, coinsurance or deductible amount for the generic version of the drug. About 89 percent of prescriptions in the United States are generic drugs, according to a report by the Generic Pharmaceutical Association.

Although generic drugs are typically cheaper for consumers to buy than brand-name drugs, the plaintiffs assert that insured consumers who purchase generic medications from Walgreens pharmacies may be paying much more for generics than cash-paying customers who use the Prescription Savings Club (PSC), Walgreen’s generic drug program.

“Since 2007, Walgreens, through its PSC, has allowed cash-paying customers to purchase more than 500 widely prescribed generic drugs for $5, $10, and $15 for 30-day prescriptions and $10, $20, and $30 for 90-day prescriptions (the ‘PSC Prices’), depending on the drug’s tier classification,” the Walgreens class action lawsuit alleges.

Pharmacies are not allowed to charge more than the “usual and customary” price for prescription drugs. This “usual and customary” price refers to the price a pharmacy charges the cash-paying public who do not use health insurance to pay for their prescriptions. According to the Walgreens class action lawsuit, the PSC prices listed above are Walgreen’s “usual and customary prices” for prescription drugs.

The plaintiffs assert Walgreen’s practice of charging insured consumers higher prices for prescription generic medications violate federal and state regulations. According to the generic drug pricing class action lawsuit, Walgreens has implemented a dual pricing scheme by using its Prescription Savings Club as a mechanism to intentionally overcharge consumers and third-party payors.

According to the Walgreens generic drug pricing class action lawsuit, the plaintiffs all paid more than the usual and customary price for generic drugs at a Walgreens pharmacy.

The Walgreens class action lawsuit asserts claims for fraud, negligent misrepresentation, unjust enrichment, and violations of various state consumer protection statutes.

The plaintiffs are represented by Susan M. Coler, Melissa Wolchansky and Amy E. Boyle of Halunen Law; Erin Green Comite and Joseph P. Guglielmo of Scott+Scott Attorneys at Law LLP; Andrew A. Lemmon of Lemmon Law Firm LLC; Daniel K. Bryson and Jeremy R. Williams of Whitfield Bryson & Mason LLP; Michael S. Brandner Jr. of Brandner Law Firm LLC; and Joseph S. Tusa of Tusa PC Attorneys and Counselors at Law.

The Walgreens Generic Drug Pricing Class Action Lawsuit is Dorothy Forth, et al. v. Walgreen Co., et al., Case No. 1:17-cv-02246, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

UPDATE: On March 9, 2018, a federal judge ruled that Walgreens must face a class action lawsuit alleging the drug store chain artificially inflates the prices of generic drugs, resulting in insured consumers paying more than uninsured consumers.