Monday, May 14, 2012

Giftcards To Patients: Walgreens Pays $7.9 Million To Settle Lawsuits That Its Giftcards Were Kickbacks To Illegally Induce Transfer Of Prescriptions To Its Pharmacies

Have you ever seen a chain pharmacy's offer that if you transfer a prescription, you will receive a $25 gift card for use at their store? I have and I always wondered how their legal counsel could have signed off on that proposal given that if one of my non-chain pharmacies had ever given a gift card for $25 to patients, they would have been charged criminally. 

The difference between large chains and small providers is that large chains usually have legal opinions that help prevent criminal prosecutions and the ability to pay large fines. This is what happened to Walgreens.

On April 20, 2012, Walgreens, the largest drugstore chain in the nation, paid the United States and participating state governments $7.9 million to settle allegations that it paid kickbacks to illegally induce the transfer of prescriptions to its pharmacies. The settlement was announced on April 20 when the federal and state governments learned that federal judges had unsealed allegations contained in two “whistleblower” or qui tam lawsuits filed against Walgreens by two Walgreens employees. The federal lawsuits were filed in Los Angeles and Detroit.

The settlement resolves allegations that Walgreens illegally offered gift cards and other incentives as kickbacks to customers covered by government-funded health insurance programs to induce the transfer of prescriptions from other stores to its pharmacies. As part of the settlement, Walgreens did not admit wrongdoing.

The federal and state governments contended that these gift cards and incentives were "kickbacks" which resulted in the governments paying for unneeded prescriptions, small-business pharmacies unfairly losing customers to Walgreens, and patients making decisions based upon monetary incentives rather than legitimate health care needs. 

Commentary: One way that some pharmacies have attempted to ensure that such promotions do not violate state and federal law is to limit it to cash or private pay insurance and not allow any Medicare or Medi-Cal/Medicaid patients to receive any gift cards or incentives for transferring prescriptions. However, mistakes can be made and it is not clear what policies and procedures Walgreens had in place. Other chain pharmacies like CVS have had such programs as well but for smaller pharmacies or health care providers, it is critical that any such incentive programs be reviewed by health care counsel before being offered to any potential patients. 

Posted by Tracy Green, Esq. Please email Ms. Green at or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  

 Any questions or comments  should be directed to Tracy Green, a very experienced health care fraud attorney and civil qui tam defense attorney at tgreen@greenassoc.comThe firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers in white collar criminal and civil qui tam matters in California and throughout the country. Their website is:


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