Walgreen to pay $35 million over claim it substituted drugs

Walgreen Co., the biggest U.S. drugstore chain with 6,000 locations, will pay $35 million to 42 states and the U.S. government to settle claims that it illegally substituted more expensive forms of drugs to boost Medicaid prescription reimbursements.

"Switching between tablets and capsules to deliver medications might seem harmless, but when it is done to solely increase profit and in violation of federal and state regulations that are designed to protect patients, pharmacies must know they are subjecting themselves to the possibility of triple damages, civil penalties and legal fees," Chicago U.S. Attorney Patrick Fitzgerald said Wednesday in a statement.

The settlement resolves a whistleblower lawsuit filed Chicago federal court.

Eight states, including California, Delaware and Maine, as well as the District of Columbia, aren't participating in the accord with Deerfield-based Walgreen, Fitzgerald said.

Walgreen didn't admit or deny any wrongdoing as part of the settlement.

Walgreen said in a statement three generic drugs made as both tablets and capsules were at issue between 2001 and 2004. Walgreen said it believes the reimbursements it received from Medicaid were consistent with applicable regulations, but it reached a settlement to avoid the expense and uncertainty of litigation.