Walgreens Settles Class Action Lawsuit Over Prescription Savings Club Pricing Practices
In a significant development, Walgreens Boots Alliance has reached a settlement agreement in a class action lawsuit alleging deceptive pricing practices within its Prescription Savings Club (PSC) program. The lawsuit, filed in 2018 by the International Brotherhood of Electrical Workers Local 38 Health and Welfare Fund and several consumers, accused Walgreens of manipulating prices to benefit from both cash-paying customers and those with insurance.
The plaintiffs argued that Walgreens inflated the “usual and customary” (U&C) prices for generic medications reported to health insurers and third-party payors. They claimed this inflated pricing resulted in customers with insurance overpaying for their prescriptions.
The key to the lawsuit lies in the dual-pricing scheme allegedly employed by Walgreens. While offering discounted prices on generic drugs through its PSC program to cash-paying customers, Walgreens allegedly charged higher prices to those with private insurance, Medicare, or Medicaid. The plaintiffs argued that the lower PSC prices should have been reported as the U&C prices, but Walgreens instead reported higher prices, leading to inflated reimbursement claims.
This settlement comes as Walgreens faces increasing scrutiny over its pricing practices and their impact on healthcare costs. The company has agreed to pay $100 million to resolve the lawsuit, although they deny any wrongdoing and maintain that the claims were without merit.
Walgreens introduced its PSC program in 2007, offering discounted prices on over 500 commonly prescribed generic medications. The program requires a yearly membership fee of $20 for individuals and $30 for families.
The settlement agreement serves as a reminder for companies to carefully consider their pricing strategies and their impact on consumers, particularly in the healthcare sector. This case highlights the complexities of navigating price transparency and fairness in the pharmaceutical industry.
Price Action:
Walgreens Boots Alliance stock (WBA) was up 0.21% at $9.35 during the premarket session on Tuesday following the news of the settlement.
