March 9, 2018 / 9:58 PM / 8 months ago

Walgreen must face lawsuit over U.S. generic drug pricing

(Reuters) - A federal judge on Friday ordered Walgreen Co to face most of a proposed class action lawsuit accusing the drugstore chain of fraudulently overcharging customers for a decade when they bought generic drugs through private insurance, Medicare or Medicaid.

Walgreen was accused of wrongly requiring insured customers to pay more than members of its Prescription Savings Club, who for a low annual fee could buy 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.

U.S. District Judge John Lee in Chicago said the plaintiffs plausibly alleged that these prices were Walgreen’s “usual and customary” prices, and that the company misled their insurers by reporting higher prices when seeking reimbursement.

He also found plausible the plaintiffs’ argument that because they had health insurance with prescription benefits coverage, they reasonably believed they would pay “at least the same as and not more than a direct-pay customer.”

Lee dismissed two of the 29 claims, including many brought under various state laws, against Deerfield, Illinois-based Walgreen, part of Walgreens Boots Alliance Inc.

Walgreen did not immediately respond to requests for comment. Lawyers for the plaintiffs did not immediately respond to similar requests.

The lawsuit sought damages for insured customers nationwide since 2007, when the Prescription Savings Club began, who said Walgreen collected inflated copayments, coinsurance and deductibles through its improper “dual pricing” scheme.

Walgreens Boots has more than 13,200 stores in 11 countries. It is acquiring 1,932 stores from Rite Aid Corp for $4.4 billion, in a process that Rite Aid this week said should be completed in the spring.

The case is Forth et al v Walgreen Co, U.S. District Court, Northern District of Illinois, No. 17-00246.

Reporting by Jonathan Stempel in New York; Editing by David Gregorio

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