Walgreens has entered into an agreement with federal prosecutors in Manhattan to settle Medicaid and Medicare fraud allegations in two separate actions brought against the national pharmacy chain, according to court records unsealed by U.S. District Judge Paul Crotty of the Southern District of New York Tuesday.

The company agreed to pay more than $209 million to resolved that it improperly billed federal health care programs for hundreds of thousands of insulin pens provided to Medicare and Medicaid beneficiaries who did not need the diabetes medication. Additionally, Walgreen's agreed to a $60 million payment for overbilling Medicaid for medications offered to consumers through a discount program.

“Medicare and Medicaid provide essential healthcare coverage to millions of people across this country. The financial integrity of these programs depends on truthful and accurate billing by pharmacies like Walgreens,” U.S. Attorney Geoffrey Berman said in a statement. “Overbilling and improper billing of Medicare and Medicaid unduly burden taxpayers and put the solvency of these vital healthcare programs at risk.”

According to federal prosecutors, the insulin fraud occurred through two specific Walgreens policies. First, the company's electronic management system prevented pharmacists from dispensing partial boxes of insulin pens, even when a patient didn't require that much insulin. Second, when the amount distributed exceeded what was prescribed for a total number of daily doses, Walgreens falsely stated in reimbursement forms that what was handed out didn't go over that limit.

As part of the other fraudulent scheme, Walgreens used its Prescription Savings Program to overcharge federal health care programs, according to prosecutors. While it was providing customers a discount on drugs ordered through the program, Walgreens was failing to tell Medicaid what the prices were when it billed for reimbursement. This led to Medicaid paying more than it should have for the discounted medications.

As part of the settlement, New York State will receive a total of $14.5 million. Both fraud suits arose from two separate federal qui tam whistleblower suits against Walgreens.

In a statement provided by a Walgreens spokesman, the company said it was pleased to have the issues resolved. The company claimed to have fully cooperated with the government, and to have admitted to no wrongdoing. According to federal prosecutors, the company “admitted and accepted responsibility for conduct the Government alleged in its complaints under the False Claims Act.”

“Walgreens is a company of pharmacists living and working in the communities we serve, and we have always taken the safety and reliability of the medicines our patients need very seriously. We are resolving these matters because we believe it is in the best interest of our customers, patients and other stakeholders to move forward,” the company statement read.

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Walgreens to pay $269 million over insulin fraud allegations

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