Walgreens Overcharged Insurance for Generic Drugs, Lawsuit Claims

By Cynthia Hsu, Esq. on January 18, 2012 | Last updated on March 21, 2019

A class action lawsuit has been filed against Walgreen Co. and Par Pharmaceutical Cos. The suit alleges that Par and Walgreens overcharged insurance companies, self-insured employers and union health funds for generic drugs.

Cheaper prescription-drug tablets were switched out for more expensive capsules. This was done in order to improve the companies' bottom lines.

The suit was filed in federal court in Chicago. It claims that the two companies were involved in the scheme together.

The drugs involved included generic versions of Zantac and Prozac. Insurance carriers ended up footing much more expensive bills for the capsules. The amount they overpaid is in the millions.

This isn't the first time Walgreen Co. has faced legal trouble. In 2008, they shelled out $35 million to 42 states and Puerto Rico. In that case, they allegedly overcharged Medicaid programs. The company filled prescriptions with more expensive dosages.

The two companies have certainly gotten themselves into a litigious situation. In the past, we've discussed whether or not a general counsel should act as a company's "moral compass."

After all, there are certain tensions in a general counsel's role. Attorneys need to ensure their company's actions are fully legal. This way the business can avoid lawsuits and criminal penalties.

But general counsels are also often privy to important corporate dealings and decisions. Executives, after all, want to make a profit. They may ask their attorneys whether or not certain behavior that falls under that legally hazy gray-area is okay.

Is this something that the general counsels at Par and Walgreen Co. were asked to consider? That's open to speculation, of course. It may be the case that the companies acted perfectly legitimately. It will be up to a court to help determine whether or not these allegations are true.

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