For Immediate Release - July 14, 2011

Walgreens to Pay $2.8 Million to Resolve Allegations of Prescription Overcharges

BOSTON - The Walgreens Company (Walgreens) will make a payment to the Commonwealth and to approximately 75 cities and towns in Massachusetts totaling $2.8 Million. The pharmacy chain has entered into a settlement with Attorney General Coakley's Office after an investigation revealed the company was overcharging public entities for prescription drugs under the workers compensation insurance system.

"Cities and towns are under a great deal of economic stress, and every dollar counts," said Attorney General Martha Coakley. "Here, the cities and towns were overcharged for prescription drug purchases. Today's action recovers nearly three million back for local communities, and works to prevent these kinds of overcharges from happening in the future."

The Attorney General alleges that Walgreens billed and received payment from cities, towns and state agencies for filling prescriptions for workers compensation claimants at prices in excess of those permitted by Massachusetts laws. Under the terms of the settlement, filed in Suffolk Superior Court, Walgreens will make a payment to the Commonwealth totaling $2.8 million. The city of Boston will receive approximately $200,000 in restitution. In addition the cities of Springfield, Holyoke, Fairhaven, Needham, Lowell, Auburn, New Bedford, Norwood, Revere, South Hadley, and Winchester will each receive refunds in excess of $10,000. On average, municipalities will receive approximately $8,900 each.

According to the settlement, Walgreens allegedly overcharged Massachusetts towns, cities, and state agencies on prescription drug prices under the workers compensation insurance system by approximately $1.4 million since 2002. Under the terms of the settlement, Walgreens will re-pay these overcharges, and will also pay an additional $1.4 Million to the Commonwealth. The settlement is part of an ongoing investigation by the Attorney General's Insurance and Financial Services Division of prescription overcharges by pharmacies to public entities under the workers compensation insurance system. The Attorney General has reached similar settlements with CVS, Shaws Supermarkets, and Stop & Shop.

This matter was handled by Assistant Attorneys General Peter Leight and Glenn Kaplan, and by mathematician Burt Feinberg and economist Bryan Lincoln of Attorney General Coakley's Insurance and Financial Services Division.