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Turns out it is possible for companies to offer customers too many savings.
Retail pharmacy giant Walgreens agreed on November 4 to pay $100 million to settle a lawsuit first filed in 2017 that claimed the company had charged insured customers more for prescriptions than its Prescription Savings Club customers. Plaintiffs alleged at the time that Walgreens was artificially inflating the prices it reported to insurers.
This comes less than two months after Walgreens paid a $106.8 million settlement over allegations that the chain had improperly submitted claims to Medicare, Medicaid, and other federal health programs for prescriptions that were filled but never picked up.
It also comes as Walgreens works through a major strategy shift after a year of seeing its shares plunge 63%.
“We admit no liability and believe these claims never had any merit,” Walgreens spokesperson Fraser Engerman said in a statement. “This resolution allows us to focus on our turnaround strategy that will benefit our patients, customers, team members, and shareholders.”
What went down. The Prescription Savings Club, which Walgreens began in 2007 and discontinued in August 2024, allowed customers to buy generic drugs without insurance for between $7.50 to $15 for a 30-day prescription and $15 to $30 for a 90-day prescription. Customers paid a yearly membership fee of either $20 for individuals or $35 for families.
According to industry standards, a pharmacy isn’t allowed to charge insurers a higher price for prescriptions than the pharmacy’s “usual and customary” price, which is how much it charges customers paying without insurance, according to the lawsuit.
The plaintiffs claimed the prices Walgreens charged Prescription Savings Club members should have been considered its usual and customary prices, but it charged insurers more, resulting in a “deceptive price scheme” that caused insured customers to pay more than noninsured customers, according to the plaintiffs.
Zooming out. Walgreens is going through a period of change, with executives announcing in October plans to close roughly 1,200 stores over the next few years.
That news came as the company reported a $3 billion loss for Q4, bringing the fiscal year’s total net loss to $8.6 billion, up 180% from the prior year.
The chain also announced earlier this month plans to lay off 256 employees to cut costs, the latest in a string of layoffs this year.