Kmart Corp. will pay $59 million to put to rest claims its in-store pharmacies overbilled federal health-care programs for generic drugs. The agreement resolves whistleblower allegations that Kmart pharmacies failed to report discounted prescription drug prices to Medicare Part D, Medicaid, and TRICARE, the health program for uniformed service members and their families.
The lawsuit against Kmart, filed by whistleblower James Garbe in 2008, alleged Kmart pharmacies offered discounted generic drug prices to cash-paying customers but didn’t disclose those prices when reporting its usual and customary prices to federal health programs. The usual and customary prices are generally what a retail customer pays out-of-pocket for a particular drug and are used by the government for Medicare and Medicaid drug pricing.
“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs,” Chad A. Readler, acting assistant attorney general for the Justice Department’s Civil Division, said in a Dec. 22 statement. “This settlement should put pharmacies on notice that there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs,” he said.
Garbe, the whistleblower who brought the case, will receive $9.3 million.