Walgreens Pays $7.9 Million Settlement Over Transfer Coupons

      Lets face it, if you work in community pharmacy these days you are probably dealing with transfer coupons.  The ridiculous practice of enticing patients to transfer prescriptions from one pharmacy to another for a financial incentive such as a $25 gift card is commonplace now.  Everyone is on board with the idea in this new age of cut-throat competition in the attempt at landing new pharmacy customers.  But now the practice has gotten the largest drugstore chain in the United States in trouble.

       According to this article on the United States Department of Justice website, the retail pharmacy chain Walgreens has paid a settlement of $7.9 million dollars to the federal government and the states involved in this case.  Walgreens was accused of violating the False Claims Act by directing people with government healthcare and prescription plans towards their pharmacies by offering $25 transfer coupons. 

       In this case, the government alleged that Walgreens employees would repeatedly ignore restrictions prohibiting patients with government insurance plans from getting the transfer coupon incentive being offered by the retail giant.  Those transfer coupons or any financial incentives given to patients with government plans are in violation of federal law. 

       The allegations were brought to the attention of the federal government by two separate whistleblowers.  One was a former Walgreens pharmacy technician and the other an independent pharmacist.  The two whistleblowers will allegedly get over $1 million dollars for their efforts to bring the problem to the attention of the government. 

       But more interesting to me is the comments in the DOJ article from some of the attorneys involved in this settlement case.  Acting Assistant Attorney General for the Civil Division of the Department of Justice Stuart F. Delery was quoted as saying  “This case represents the government’s strong commitment to pursuing improper practices in the retail pharmacy industry that have the effect of manipulating patient decisions.”

        U.S. Attorney for the Eastern District of Michigan Barbara McQuade added “Continuity with a pharmacist is important to detect problems with dosages and drug interactions. Patients should make decisions based on legitimate health care needs, not on inducements like gift cards.”  I couldn’t have said it better myself!

         Now I know what some of you will say.  Every pharmacy chain offering transfer coupons is guilty of the same illegal practice to some extent.  Employees can forget the restrictions or they are directed by management to give the gift card anyway to appease a grumpy customer.  I can also hear the grumblings about how $7.9 million, while a large sum of money, is but a drop in the bucket for a company the size of Walgreens. 

         It is true that Walgreens may not feel too much financial pain from handing over almost $8 million to the government.  But this is a lesson for Walgreens and the rest of community pharmacy- the government is on watch.  And if they know about a problem like illegal transfer coupons being offered to patients with government insurance plans, they will take action.  And companies may ignore employees who complain about the transfer coupon practice, but having to pay the federal and state governments millions in fines will get their attention. 

         As to the criticism that “everyone is doing it” I will only say the fact that this practice is commonplace doesn’t make it right.  I would also point out that anyone working at any of these other pharmacy chains is welcome to file a complaint with the government themselves regarding the illegal offering of transfer coupons.  Who knows, you too could end up with a thank you and a large check from the government!

        But the real point and reason why I am sharing this story with you today is the fact that while some attorneys seem to understand the principals of patient rights and the dangers of pharmacy hopping, the state board of pharmacies seem to ignore the transfer coupon phenomenon and the resulting fall out and increased risk of errors inherent when patients move their prescriptions around constantly.  Why is that? 

        Most state boards will deny that transfer coupons put patients at risk or increase the likelihood of a prescription error or misadventure such as a missed drug-drug interaction.  But those attorneys are right, continuity of care for pharmacy customers is important.  I just can’t understand why pharmacy board members don’t also realize the dangers behind the practice.   The lawyers seem to get it. 

        The reality of community pharmacy is that pharmacists and technicians are now working under extreme conditions that are already conducive of producing above average error rates.  The last thing the industry and employees working in these pharmacies need is the added strain and potential for errors that come with offering transfer coupons to patients.  Transfer coupons are simply a bad idea even when they don’t violate federal law.

       I think what bothers me the most about transfer coupon promotions is the fact that they don’t even accomplish what they’re designed to do.  You create a culture of “what do I get?” from pharmacy customers and you also get patients that will simply fill a prescription transfer once and then sprint to the next chain who offers them the same promotional deal as your pharmacy.  In the end, you create this revolving door of pharmacy patients.   It also creates several times the normal amount of work involved in filling one prescription. 

       I’m glad that this Walgreens case ended in a large government settlement.  Maybe some of the other pharmacy chains will hear this news and realize that these transfer coupons just aren’t worth it?  Maybe they will realize this type of promotion is dangerous?  Hey, a pharmacist can dream can’t he?

The Redheaded Pharmacist

8 Comments to “Walgreens Pays $7.9 Million Settlement Over Transfer Coupons”

  1. By Steve, April 26, 2012 @ 9:04 am

    Pharmacy transfer coupons are ridiculous, just as price matching is ridiculous! I work in an outpatient pharmacy for a hospital. Basically it is an independant pharmacy in a clinic setting. We can service anyone who comes in. In our area we have Safeway, Walgreens, CVS, and RiteAid. Over the 15 years I have been at this location, I have had countless patients transfer their prescriptions because of a coupon or price break. Without fail, 2-3 months later I am transfering the prescriptions back because they did not like the service they received at the pharmacy counter.

    My point is not to pat ourselves on the back for providing great service. I feel that all pharmacies should provide fantastic customer service. A patient should be picking a pharmacy they go to because they know that when they go there they will be recognized. They will receive the continuity of care they deserve by recognizing the pharmacist behind the counter and the pharmacist will recognize the patient. Yes, times are tight, however, the management at the Big Box Pharmacies needs to learn to treat their employees with enough respect so that they may have enough staff to provide the service that is necessary for appropriate pharmaceutical care. This is medication we are dispensing, not hot dogs and soda!



  2. By Smartass, CPhT, April 26, 2012 @ 2:37 pm

    “Walgreens was accused of violating the False Claims Act by directing people with government healthcare and prescription plans towards their pharmacies by offering $25 transfer coupons.”

    If this is illegal, why is it still okay for Medicare Part D plans to offer lower co-pays to patients who use the PBM’s mail-order pharmacy instead of retail?


  3. By Pharmaciststeve, April 26, 2012 @ 9:25 pm

    @smartass… because the PBM’s are insurance companies and as such.. they are exempt from Sheriman Antitrust… which makes just about anything that they do is LEGAL from their perspective… which is ILLEGAL in the REAL WORLD. Follows the same logic… why they can offer take it leave it contracts and it is illegal for more than one pharmacy to try and negotiate… the latter is considered PRICE FIXING…


  4. By Bluetowelboy, April 26, 2012 @ 9:56 pm

    For that matter why would it be legal to give meds away for free to get the rest of the patients business?


  5. By donna, February 17, 2013 @ 10:55 pm

    unaware of the transfer incentive I transferred 5 refillable prescription to Walgreens due to an incident at the Rite Aid that I had been going to for years. Upon picking up the firs one the technician told me I was entitled to $25 incentive. she said she would ring it up at pick-up. Upon picking up she told me I have a federal health card therefore I do not qualify. I thought maybe they thought it was welfare and that their system can not recognized the difference.. I assured her my 31 years of federal civilian service is NOT government assisted. she said sorry that is Walgreens policy I wrote to Walgreens (jan 2013) explaining the situation and to say it is not right that MOST are given an incentive but I am as hard-working as the rest of them and to suggest they look into this issue. I never heard back from them. I called the store a week later to ask if they had a chance to look into this and was told nothing they can do about it. very disappointed. In this day and age we can use all the help we can get. five transfer would have been 125 dollars that would help pay the co-pay for the monthly prescription I need


  6. By rybox, March 13, 2014 @ 12:05 am

    Walgreens is always so busy, understaffed, and in a huge hurry–at least in my area. I can’t stand the place. They will answer medication questions, but they act like it is a huge inconvenience. I like that they are 24 hours, but that comes at a price… (not to mention their prices are MUCH higher that Walmart, or a local pharmacy shop). I don’t usually think it’s worth it, unless its an emergency, and my regular pharmacy happens to be closed.


  7. By Angsapp, June 13, 2014 @ 9:27 am

    My husband and I pay for our insurance but every pharmacy I know specifically says that if your insurance is government assisted you are not entitled to the incentives. I was unaware of the situation with Walgreen’s until I inquired about it yesterday when I went to have my medicine transferred because of the convenience of the location because we moved. I think it’s sad that these programs are stopped for people that get out and work hard and have pricey copays. In to response to the thread above even if you would have gotten the 25.00 card it would not have been able to be used on prescriptions. That is one of the exclusions. Good luck to everyone


  8. By wesley mallett, October 3, 2014 @ 11:44 pm

    The government actively participates in discrimination while they deny a private business the opportunity to discriminate. The government discriminates on age while awarding housing opportunities. The government discriminates against citizens on disability from receiving most other benefits when traveling. The government discriminates against poor people who want to be manipulated by pharmacy incentives like anyone else. I am on Medicare and State Insurance. I want the government to privatize these decisions and to stop making laws which limit my opportunities to profit from doing business with any company. We need a smaller government that harasses businesses less. By the way, when I go to Philippines, medicine is 1/3 the price it is in the USA. How do you like getting screwed while paying for my medicine?


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