Pharmacy chain Walgreens has agreed to a $360 million settlement ending a nearly five years-long arbitration dispute with health insurance provider Humana. Interestingly, this payout represents only about half of the original amount that Walgreens had been ordered to pay.
At the beginning of this friction, in 2019, Humana claimed that Walgreens had been overcharging the company and its beneficiaries with ‘unlawfully inflated’ prices for prescription medications for over a decade. The dispute focused on Walgreens’ Prescription Savings Club, a program designed to help uninsured or underinsured patients secure more affordable medications. Humana alleged that Walgreens recorded the standard retail prices for the drugs dispensed under this program as its ‘usual and customary’ rates when submitting reimbursement claims, rather than the special prices.
By March last year, an arbiter directed Walgreens to pay Humana a $642 million award. Nevertheless, Walgreens challenged the award in federal court.
In a lawsuit launched in May, Walgreens argued that the arbitration began in ‘betrayal’ and culminated in a ‘miscarriage of justice’. The pharmacy giant maintained that it should not be held liable to pay more than half a billion dollars ‘when no ordinary reader of the contract would find that Walgreens had done anything wrong’. It also posited that Humana, fully cognizant of Walgreens’ approach, did nothing until being encouraged by a conflicted counsel.
In response, also in May, Humana petitioned the judge to uphold the original $642 million award.
U.S. District Judge Ana Reyes dismissed Walgreens’ federal lawsuit on a Friday, one day after a Walgreens filing with the Securities and Exchange Commission unveiled that both companies had privately concurred on a new award of $360 million on December 29.
As of now, neither Humana nor Walgreens have responded to requests for comments.
Notably, Walgreens continues to deal with other court issues that accuse it of overcharging payers for prescription drugs. One such case is in relation to Blue Cross plaintiffs, alleging Walgreens of knowingly submitting claims with inflated drug prices. For more details of the story, visit here.