Lawsuit alleges Walgreens overcharges customers with insurance for generic drugs

A California man is suing Walgreens Boots Alliance, accusing it of profiting by charging customers with insurance more for generic drugs than what they would have paid if they had not presented an insurance card.

David Grabstald filed the proposed class-action lawsuit in federal court in Illinois on Wednesday, accusing the Deerfield-based pharmacy giant of fraudulently overcharging many customers for generic drugs.

Walgreens does this, Grabstald alleges, because of its agreements with pharmacy benefit managers — which act as middlemen between pharmacies and insurance companies.

Customers pay pre-determined copays for medications even if the medications actually cost less than the copays, according to the lawsuit. Some of the extra money goes to the pharmacy and some of it goes to the pharmacy benefit manager, Grabstald alleges.

For example, if a patient's copay on a generic drug is $15 but the drug only costs the pharmacy $2, the pharmacy might get to keep an extra $5 of that copay and send the remaining $8 to the pharmacy benefit manager, he alleges.

Grabstald alleges that he was charged an average of $17.74 when he used his insurance to buy a prescription drug at Walgreens on several occasions this year and last year, but that he would have only been charged $10 for that same drug if he had not used his insurance. Walgreens did not tell him it would be cheaper to pay for the drug outright, he alleges.

"You don't expect when you go into your pharmacy that you're going to pay more by using your insurance card than a cash payer would just walking in off the street," said Steve Berman, an attorney for Grabstald and a partner at law firm Hagens Berman Sobol Shapiro. "You don't expect that a pharmacist is hiding that from you."

Walgreens spokesman Phil Caruso said in an email Wednesday, "The complaint lacks merit and we will vigorously defend against the allegations."

The same law firm that filed the suit on behalf of Grabstald filed a similar lawsuit against Walgreens rival CVS Health earlier this week.

At least 16 other lawsuits have also been over so-called clawbacks, according to a Bloomberg investigative story on the issue published earlier this year.

CVS Health spokesman Mike DeAngelis said in a statement that the allegations against CVS are without merit and built on a false premise. He noted that copays are determined by a patient's prescription coverage plan, not pharmacies, and he said CVS' own pharmacy benefit manager, CVS Caremark, does not engage in the practice of copay clawbacks.

"CVS has not overcharged patients for prescription copays, and we will vigorously defend against these baseless allegations," DeAngelis said.

Such clawbacks are not uncommon, according to the National Community Pharmacists Association. About 83 percent of pharmacists surveyed by the association earlier this year said they had witnessed such copay clawbacks at least 10 times in a month, though two-thirds of those surveyed said not all pharmacy benefit managers engage in the practice.

According to that survey, pharmacy benefit managers sometimes also impose "gag clauses" that forbid pharmacists from volunteering to customers when it might be cheaper to pay for a drug outright than with insurance.

Attempts to reach the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, were not immediately successful Wednesday afternoon.

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