Walgreens Reaches $360 Million Settlement with Humana Regarding Inflated Prescription Drug Prices
In January 2024, Walgreens and Humana reached a $360 million settlement to resolve ongoing lawsuits where Humana argued that Walgreens violated the PBM agreement by artificially inflating prescription drug prices for years. Humana was initially awarded $642 million by an arbitrator a few years prior, which Walgreens challenged in court.
All of this back and forth is based on a dispute over the PBM contract definition of “Usual & Customary” (U&C) pricing and Walgreens’ Prescription Savings Club (PSC). Humana argued that the PSC prices represent Walgreens’ true U&C or cash prices and that Walgreens did not submit these prices on claims to Humana. Walgreens argued that PSC prices are not U&C because club prices are not available to the general public because members must sign up and pay an annual fee to get access to these lower PSC prices.
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In an interesting twist, the law firm representing Humana in this dispute is the same law firm that Walgreens retained in 2008 to provide advice on structuring their PSC in the first place. Walgreens contends that the law firm “switched sides” and actively solicited Humana to pursue the lawsuit against Walgreens.
This is not the first lawsuit brought by an insurer against Walgreens (or CVS). These two chains are “big fish” with deep pockets and are much more susceptible to legal action. Despite the legal entanglements, Walgreens continues to offer their PSC nationwide.
While independent pharmacies are individually at much lower risk of legal actions from PBMs based on U&C pricing policies, the underlying contracts have similar language. PAAS National® has often seen PBM auditors ask pharmacies to provide cash prices for select drugs during onsite audits – any price quotes provided should be caveated that these prices are reflective of that business day only and may fluctuate based on date and pharmacy costs.
PAAS Tips:
- Pharmacies should review third-party reimbursement and evaluate their competitive marketplace when setting U&C prices.
- PAAS cautions against “discount clubs” or automatically lowering prices for cash customers without modifying the U&C.
I obtained my PharmD from the University of Wisconsin-Madison School of Pharmacy and worked for a major chain as well as various LTC and independent pharmacies, before coming to PAAS.
I am passionate about learning and teaching. I strive to learn something new about PBM audits every day, so that PAAS can be more knowledgeable to better serve our members! In 2018, I started traveling to state pharmacy conferences to present audit seminars and meet our wonderful members in person.
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