Justice Department Sues Walgreens for Alleged Illegal Prescription Processing

On By Littum

Walgreens Boots Alliance (WBA, Financials) saw its stock decline on Friday after the message of a US Department of Justice lawsuit accusing the company of knowingly filling millions of illegal prescriptions for controlled substances. Shares closed at $12.52, down 3.17%, and extended losses in after-hours trading, falling another 5.03% to $11.89.

Alleging that Walgreens violated the Controlled Substances Act and the False Claims Act, the DOJ filed a complaint in the United States District Court for the Northern District of Illinois. The lawsuit alleges that even though clear signs indicated they lacked a genuine medical use, the pharmacy chain filled prescriptions. for opioids and other prohibited substances.

Walgreens pharmacists reportedly handled early refills, dispensed too many opioids and filled prescriptions for combinations of drugs that were often abused together from August 2012 onward. Federal investigators allege that Walgreens put efficiency before compliance, so pharmacists were under pressure to quickly fill prescriptions without adequately verifying their validity. The complaint also alleges that the company violated the FCA by seeking reimbursement for these prescriptions through public health programs.

For each illegal prescription dispensed under the CSA, Walgreens may be subject to civil penalties ranging from $80,850; in addition, triple damages for FCA violations. The case further highlights the company’s alleged responsibility for exacerbating the opioid epidemic, which has resulted in major public health impacts such as overdoses.

Under the FCA’s qui tam rules, which let private citizens sue on behalf of the government and share in any financial recovery, the Justice Department’s case aggregates filed whistleblower complaints. Federal authorities emphasized the importance of pharmacies in guaranteeing the responsible dispensing of regulated drugs.

The market’s response on Friday highlights investor concerns about the financial implications of the case, which could lead to significant fines and more public scrutiny. Although Walgreens has more than 8,000 stores nationwide, it has not publicly commented on the matter.

This article first appeared on GuruFocus.