Walgreens Pharmacy Chain Pays $209 Million to Settle VSG Clients’ Lawsuit Alleging Over-Dispensing of Insulin

Washington, D.C., January 22, 2019:   The law firm, Vogel, Slade & Goldstein, LLP,  announced today that Walgreens Boots Alliance has agreed to pay $209.2 million to the United States and a number of states to resolve a lawsuit brought by two of the firm’s whistleblower clients alleging that Walgreens knowingly bilked Medicare, Medicaid and other government health programs of millions of dollars by billing for unprescribed, medically unnecessary insulin.    Walgreens has executed a written agreement to pay the federal government just over $168 million and has an agreement in principle with multiple states to pay them the remainder of the $209.2 million.

The whistleblowers’ claims were anchored on an alleged scheme that involved Walgreens programming its software to dispense insulin pens only in the manufacturers’ 5-pen cartons regardless of the amount of insulin prescribed.  According to the whistleblowers’ complaint, Walgreen commonly dispensed more than a 30- or 90-day supply of insulin to customers while falsely reporting to payers that the supply was just a 30- or 90-day supply, and then refilled the prescriptions prematurely, upon expiration of the 30- or 90-day period.

While Insulin pen manufacturers generally sell the product in 5 pen cartons (containing 15 ml. or 1,500 units of insulin), they do not prohibit pharmacies from opening cartons.  Unopened, refrigerated pens protect the insulin from degradation and contamination. Drug makers mark each pen with the information needed for sale, such as bar codes, product names, lot numbers and expiration dates.  In April 2018, Walgreens reprogrammed its software to allow the dispensing of individual pens.

The whistleblowers, two pharmacists, filed their lawsuit in 2015 in federal court in Manhattan under the “qui tam” provisions of the federal False Claims Act and analogous state laws.   The lawsuit was placed under seal to provide the government plaintiffs with an opportunity to investigate and decide whether to join the case.   On Friday, January 11, 2019, the United States simultaneously intervened in the case, filed its own complaint and submitted a stipulation of settlement containing Walgreen’s admissions to certain facts.   The Court approved the settlement on Friday, January 18, 2019, and unsealed the case today.   Under the False Claims Act and analogous state laws, the whistleblowers will be entitled to receive between 15 and 25% of the government’s recovery.

Adam Rahimi, one of the whistleblowers, stated, “I am pleased with the outcome.   I am grateful for the outstanding work of both the U.S. Attorney’s Office in Manhattan, whose efforts were led by AUSAs Li Yu and Jessica Hu, and the state investigative team led by Indiana Supervising Deputy Attorney General Steven Hunt.   The taxpayers should not have to pay for the waste generated by over-dispensing.”

Whistleblower lawyer Shelley R. Slade, lead attorney for the whistleblowers, stated, “we believe that our clients’ lawsuit stopped a fraudulent Walgreens’ practice that not only generated tremendous waste on the backs of the taxpayers, but also may have fueled an unsafe and illegal secondary insulin market.  Those buying insulin on the black market put their health at risk by using a dangerous drug without physician oversight and without assurances that the insulin was handled in a manner designed to protect its integrity.”  The case is U.S. ex rel. Rahimi, et al. v. Walgreens Boots Alliance, No. 15-cv-5686 (SDNY).    Please contact Ms. Slade at tel. no. 202-537-5903 or sslade@vsg–law.com with any questions.  Additional background follows.

Background

The case involves an insulin product known as an “insulin pen,” a device that is pre-loaded with 3 ml. (equal to 300 units) of insulin and that delivers multiple doses.  Examples of common insulin pen products are Humalog KwikPen, the Novolog Flexpen, Levemir Flexpen, Lantus SoloStar and Apidra SoloStar.   Medicare and Medicaid collectively pay hundreds of millions of dollars each year to reimburse pharmacy claims for these products; in 2014, Medicaid alone paid over $400 million for insulin pens.

The whistleblowers, each of whom has worked for Walgreens, alleged in their complaint that Walgreens programmed its dispensing and billing software to prevent pharmacy staff from dispensing individual pens removed from their cartons.   However, most government health insurance plans won’t pay for more than 30 or 90 days of an insulin prescription at a time, and a five-pen carton often will contain much more insulin than what the physician has prescribed for the patient during the 30- or 90-day period.  Insulin dosing is highly individualized based on an individual’s weight and health status.   As a result, to get Medicare, Medicaid and other insurers to pay claims for full cartons of insulin, Walgreens, the whistleblowers alleged, often falsely represented on claims that the days’ supply being dispensed was 30 or 90 days when, in reality, it was far more, and then compounded the fraud by dispensing refills prematurely upon expiration of the understated “days’ supply” of the prior fill.

For example, if a patient was prescribed 30 units of insulin per day (which equals 0.3 ml. of insulin), and was covered by a Medicaid plan limiting the days’ supply for a single fill to 30 days, then, according to the complaint, Walgreens would bill Medicaid for the entire carton (15 ml.) and represent to Medicaid that the days’ supply was 30 days, even though it was actually 50 days .(15 ml. is the amount of insulin in a carton.  15 ml. is equal to 1,500 units of insulin.  1,500 units divided by the daily dose of 30 units per day equals 50 days.)   Walgreens allegedly would also enter the number 30 into its dispensing and billing software system as the “days’ supply” dispensed, and then dispense a refill as soon as 30 days later, even though the patient would have had plenty of insulin on hand if he or she used the product as directed.

 

Notice of Intervention

U.S. Complaint

Settlement Agreement

Relators’ First Amended Complaint