Walgreen, Par sued for alleged RICO violations, drug overcharges

A health and pension fund sued Walgreen Co. and Par Pharmaceutical Co. for allegedly overcharging for generic prescriptions, which in turn allegedly cost third-party payers two to four times more for the medications.

United Food and Commercial Workers unions and Employers Midwest Health Benefits Fund, individually and on behalf of third-party payers such as insurance companies, self-insured employers and union health and welfare funds, filed in U.S. District Court in Illinois the class-action suit alleging several violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Walgreen and Par entered into a health resource partnership under which Par allegedly manufactured and marketed generic versions of the drugs Zantac and Prozac in dosage forms that were not subject to strict reimbursement limitations. Walgreen also allegedly made the Par capsules the only form of generics readily available to its retail customers, despite the fact that it was dispensing a drug that was not legally substitutable for tablets, according to the suit.

Walgreen’s profits increased by allegedly “systematically and unlawfully” filling customer’s prescriptions with the more expensive Par products instead of the inexpensive dosages that were prescribed, the suit accused. Using Par products allowed Walgreen to bring in $80 million per year instead of the $5 million that the prescribed tablets would have netted it, costing the third-party payers two to four times more, according to the suit.

The plaintiffs requested compensatory damages, including the costs of bringing suit such as attorneys’ fees.

A Walgreen’s official said the company does not comment on pending suits.

Par officials did not respond to a request for comment.