Court Nixes Drug Fraud Suit Against Walgreens

CHICAGO (CN) - The 7th Circuit dismissed a suit that claimed Walgreens fraudulently filled prescriptions for generic medications with the brand-name versions, allowing them to bill up to four times as much per client.

Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust, which pays pharmacies for the portion of a drug's price that exceeds its members' copayments, alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.

The complaint centered on prescriptions for Zantax (ranitidine) and Prozac (fluoxetine). While the generic versions are subject to price caps stipulated by Pirelli's Pharmacy Benefit Manager, the brand-name versions are not, allowing Walgreens to charge much higher prices - two to four times as much - for the drugs.

Illinois law prevents a pharmacy from filling a prescription for a tablet form of a drug with a capsule or vice versa. Changing from generic to brand name in the case of ranitidine and fluoxetine would violate this statue.

Pirelli submitted data showing that Walgreens filled 97 percent of ranitidine prescriptions with Zantax capsules, far above the average at other pharmacies - three percent.

But an Illinois federal court dismissed the suit, finding that Pirelli had not satisfied the pleading requirements for a fraud claim. The 7th Circuit affirmed on Friday.

Failing to demonstrate that the prescriptions did not call for brand-name medications, Pirelli could not prove Walgreens had committed fraud, the three-judge panel found.

"Absent a reason to think otherwise, the most plausible explanation for dispensing a well known, popular drug in any form is that it was prescribed," Judge Joel Flaum wrote.

Pirelli has reimbursed Walgreens for the more expensive drugs only 13 times since 2001. Only one of these reimbursements was in Illinois.

Walgreens operates roughly 7,000 pharmacies in the U.S.

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