Walgreens has reached a $2.8 million settlement with federal and state authorities to resolve claims that it reported inflated prices for generic drugs to Medicaid programs in Massachusetts and Georgia. The settlement addresses allegations under the federal, Massachusetts, and Georgia False Claims Acts, with the alleged overbilling occurring between 2008 and 2023. The case originated from a whistleblower complaint and was handled under a qui tam provision, which allows private citizens to bring lawsuits on behalf of the government. The pharmacy chain reportedly failed to disclose true “usual and customary” prices, which Medicaid uses to determine reimbursement rates.
A similar settlement involving Walgreens was reached in 2023, where the company agreed to pay $106.8 million to resolve accusations of billing for prescriptions that were never dispensed. That case, covering the period between 2009 and 2020, also involved claims brought under the False Claims Act and followed investigations by the U.S. Department of Justice. At the time, the government alleged that Walgreens had collected significant sums for medications that patients never picked up. These two cases underscore ongoing compliance and billing issues within the company’s pharmacy operations.
What triggered the recent Walgreens settlement?
The latest settlement was prompted by claims that Walgreens submitted higher-than-actual prices for certain generic medications to both Massachusetts’ MassHealth and Georgia’s Medicaid programs. These inflated prices allegedly caused overpayments by the state programs, which rely on the lowest available price or “usual and customary” price to calculate reimbursements. According to the U.S. Department of Justice, this misrepresentation led to Medicaid paying more than necessary over a 15-year period.
How does this settlement relate to broader enforcement trends?
This case fits within a larger trend of aggressive enforcement under the False Claims Act. During the fiscal year ending September 30, 2024, the Justice Department reported over $2.9 billion recovered through settlements and judgments under the Act. Healthcare-related cases, including those involving pharmacies, accounted for $1.67 billion of that total. Additionally, whistleblowers filed 979 qui tam lawsuits that year—marking a record high—with 588 cases reaching resolution.
The False Claims Act allows the government to seek treble damages and financial penalties against parties found to have knowingly submitted false claims or failed to return overpayments. These legal provisions create financial incentives for whistleblowers to report suspected fraud and hold companies accountable. The Department of Justice emphasized that accurate billing practices are critical for protecting taxpayer-funded healthcare programs.
“The United States, Massachusetts and Georgia allege that, between 2008 and 2023, Walgreens’ pharmacies submitted a higher usual and customary price to the MassHealth and Georgia Medicaid programs for certain generic medications at certain times,” the Department of Justice said. “By failing to report the correct usual and customary price, Walgreens’ pharmacies allegedly caused the MassHealth and Georgia Medicaid programs to pay more for these generic medications than they should have.”
Walgreens declined to provide a comment regarding the settlement. The company has previously resolved similar claims without admitting wrongdoing. Its parent company, Walgreens Boots Alliance, also participated in the earlier $106.8 million settlement, indicating a broader set of compliance challenges across its business units.
Settlements like these often lead to increased scrutiny from regulators and may result in tighter oversight of corporate billing processes. For healthcare providers, especially pharmacies engaging in public health program reimbursements, maintaining transparent and accurate pricing is critical. Medicaid and similar programs depend heavily on price disclosures to ensure cost control and prevent fraud. For consumers and taxpayers, these enforcement actions aim to protect public funds and preserve the integrity of healthcare financing systems.
