Last month, the DOJ and other state governments entered into a settlement with Walgreens. The company was accused of unlawfully soliciting Medicare and Medicaid recipients to enroll in its “Prescription Savings Club,” which gave discounts on thousands of brand and generic drugs as well as a 10% rebate on all Walgreens branded products including household products, grocery, OTCs, etc. The arrangement was alleged to implicate federal and state anti-kickback laws.  Walgreens agreed to pay the states and federal government $50 million.

Walgreen’s case teaches us three important lessons:

  1. Absolutely no discounts or rebates on drugs for Medicare, Medicaid, Tricare patients (and other federally funded programs).

  2. Your staff must understand how to properly implement savings programs. For example, Walgreens knew that it should not allow government health insurance beneficiaries into its Prescription Savings Club and it had published materials saying that such patients are ineligible. Nevertheless, Walgreens employees marketed the program to these beneficiaries and enrolled such without proper verification.  Proper policies and procedures, plus training – is a must when it comes to discounts, savings, and rebates.

  3. Do not incentivize your employees to enroll patients into discount programs. Walgreens paid its employees $1-5 for enrolling each patient into the Prescription Savings Club. If your employees have incentives based on patients’ volume, they are likely to skip the verification process.

We haven’t seen much anti-kickback enforcement with pharmacies and its discount programs. The Walgreens case is likely to change that. The DOJ swore to continue aggressively investigate allegations of fraud and abuse. Beware!