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Law360, New York (September 01, 2009) -- A federal judge has dismissed without prejudice claims against Walgreen Co. that accused the retail pharmacy chain of scheming to overcharge third-party payors when it dispensed three generic drugs.
Judge Virginia M. Kendall granted Walgreens' motion to dismiss on Monday in the U.S. District Court for the Northern District of Illinois, saying plaintiff Pirelli Armstrong Tire Corp., Retiree Medical Benefits Trust failed to state the claims.
Pirelli filed the putative class action in April, accusing Walgreens of unjust enrichment and of violating 35 state consumer protection statutes. The fund has 14 days to file an amended complaint, the ruling said.
Pirelli reimburses pharmacies, including Walgreens, for prescription drugs bought by plan participants. But in this case, Walgreens had been overcharging Pirelli and other putative class members on generic versions of three drugs: ranitidine HCI, fluoxetine hydrochloride and selegiline hydrochloride, the complaint said.
At issue is the price differential between the tablet and capsule forms of the generic drugs. From 2001 and 2005, the complaint said, Walgreens filled prescriptions for one form of the drugs with the other form instead — which left Pirelli and others paying Walgreens two to four times more than they would have if the scripts had been filled as they were written, Pirelli said.
Plan participants pay a flat co-pay when they buy the drugs, and Pirelli covers the rest. But while Pirelli can decide what it will charge its customers, reimbursement rates for the drugs are established by pharmacy benefit managers based on a maximum allowable cost for what Pirelli will reimburse the pharmacy for the generic.
Pirelli cited information revealed in another suit by a former Walgreens pharmacist when it alleged Walgreens had a corporate policy of systematically altering prescriptions that were subject to these reimbursement limits, the ruling said.
In one patient's prescription history, the average reimbursement rate charged by Walgreens for ranitidine was more than $60 higher than what other pharmacies charged Pirelli.
On several occasions, Pirelli reimbursed Walgreens for the more expensive dosage form when the less expensive one was available, Pirelli claimed.
But Judge Kendall slammed Pirelli's complaint, saying the “allegations are so sparse with respect to where the specific fraudulent conduct occurred and where it personally suffered injury that the court cannot even determine which state consumer protection statute to use in analyzing whether Pirelli has stated a claim for consumer fraud.”
And while Pirelli established a foundation for its argument that Walgreens had a corporate policy of switching dosage forms, it gave no details to substantiate that the fund itself was defrauded, Judge Kendall wrote.
“Pirelli's complaint completely lacks any details regarding Walgreens’ fraudulent conduct toward Pirelli and fails to identify even one specific fraudulent transaction at a specific Walgreens location involving an identified Walgreens employee,” she said in tossing out the consumer fraud claims.
Pirelli also “utterly fails” to put Walgreens on notice of specific allegations, she said.
Walgreens operates about 7,000 retail pharmacies in 49 states, the District of Columbia and Puerto Rico.
A Walgreens spokesman did not return an e-mail seeking comment.
Attorneys for the plaintiff did not return a call for comment. The retirement fund is not related to Pirelli Tire North America, according to a spokesman.
Walgreens operates approximately 7,000 retail pharmacies in 49 states, the District of Columbia and Puerto Rico.
Pirelli is represented by Cafferty Faucher LLP.
Walgreens is represented by Loeb & Loeb LLP.
The case is Pirelli Armstrong Tire Corp., Retiree Medical Benefits Trust v. Walgreen Co., case number 1:09-cv-02046, in the U.S. District Court for the Northern District of Illinois.
