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Walgreens to pay $50 million to resolve U.S. prescription kickback case

By Nate Raymond and Brendan Pierson

NEW YORK (Reuters) - Walgreens Boots Alliance Inc <WBA.O> will pay $50 million to resolve a U.S. lawsuit accusing it of violating federal law by providing beneficiaries of government healthcare programs discounts and other incentives to fill their prescriptions at its pharmacies.

The settlement, announced by Manhattan U.S Attorney Preet Bharara on Thursday, resolves a whistleblower lawsuit that the government joined related to the national pharmacy chain's Prescription Savings Club program.

Bharara said Walgreens allowed beneficiaries of Medicare and Medicaid to take part in the Savings Club program even though doing so violated a federal law against paying those beneficiaries kickbacks so they would choose Walgreens.

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Walgreens' written materials about the Savings Club program, and its own internal policy, stated that beneficiaries of government health insurance programs were not eligible to participate, according to court filings related to the settlement.

Nonetheless, the company offered employees bonuses for enrolling people in the program without checking whether they were eligible, Bharara said. As a result, he said, hundreds of thousands of beneficiaries were enrolled in the program.

Walgreens acknowledged as part of its settlement that government beneficiaries were improperly enrolled in its savings program.

About $46 million of the settlement will resolve claims by the federal government and the rest will go to states, which help administer Medicaid.

The former Walgreens pharmacy manager who filed the whistleblower lawsuit, Marc Baker, will get about $9.7 million of the federal government's portion of the settlement.

"We entered into this agreement to avoid the delay, expense, and uncertainty of litigation, and did so without any admission of legal liability," Walgreens spokesman Jim Cohn said in an email. He said the company still offers discounts to customers who are not government beneficiaries through the Savings Club program.

(Reporting by Nate Raymond in New York, editing by G Crosse and David Gregorio)