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Insured consumers gouged when buying generic drugs, lawsuit alleges

The case involves the murky world of pharmacy benefit managers and insurers

A federal class action lawsuit charges that Walgreens unlawfully conspired with pharmacy benefit managers to gouge customers for generic drugs.

The case grows out of the mysterious and often baffling world of drug pricing, in which different consumers pay wildly varying prices depending on what insurance they have. In some cases, consumers with no insurance at all can buy a generic drug for less than the copay charged to consumers who have insurance.

The lawsuit was filed in Chicago federal court on behalf of David Grabstald, a Californian who charges that Walgreens entered into secret contracts with the pharmacy benefit managers, known as PBMs, which act as middlemen between insurance companies and pharmacies, according to a Courthouse News Service report.

The PBMs negotiate with the insurance companies and pharmacies, setting the price that pharmacies can charge their customers while still making a profit. 

"Secret, undisclosed contracts"

“As a result, Walgreens is eager to reach agreements with PBMs that will drive more people to the stores, where customers often purchase more than their generic drugs,” the lawsuit states. “These agreements with PBMs are based on secret, undisclosed contracts, under which Walgreens agrees to specific amounts it will charge and collect from insured customers—but the customers can neither see nor learn about these agreements or their terms from the pharmacies, the insurance companies, or anyone else.”

In some cases, the agreement may mean that customers with insurance wind up paying more than customers without insurance, the complaint alleges.

“Although the customers are told, for example, that they are required to pay $15 in a ‘copay’ for the drug, in reality this is not a ‘copay’ at all because Walgreens is sending a significant portion of the $15 back to the PBMs. The PBMs, far from assisting with the payments, are taking an extra chunk out of the customer’s copayment,” the lawsuit states.

Grabstald, who was insured by Anthem Blue Cross Blue Shield, noticed he was overpaying for his generic drugs at Walgreens with his insurance and that the cost of the drugs without his insurance would have been significantly less.

His suit alleges that Anthem and its PBM, Express Scripts Inc., have a written contract outling the terms under which Express Scripts administers the prescription-drug benefit part of Anthem’s insurance plans, all without the knowledge or consent of the consumer.

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