Justice Department: Walgreens settles amid probe into illegal prescription deals

(CNN) - Walgreens will pay governments $7.9 million in a settlement reached amid allegations the drugstore chain illegally paid kickbacks so that prescriptions would be transferred to its pharmacies, the U.S. Justice Department announced Friday.

Investigators had been looking into whether Walgreens had given people enrolled in government-run health programs -- such as Medicare, Medicaid and Tricare (for military families) -- $25 gift cards if they moved their prescriptions over to Walgreens' pharmacies, according to a Justice Department news release.

Such inducements violate federal law, the department says.

The drugstore chain's advertisements typically noted that such offers didn't apply to those insured via Medicaid, Medicare and similar programs. But the government claimed "Walgreens employees frequently ignored the stated exemptions on the face of the coupons and handed gift cards to customers who were beneficiaries of government health programs."

The government learned of the allegations in lawsuits filed by two whistle-blowers: Cassie Bass, a pharmacy technician who worked at Walgreens in Detroit, and Jack Chin, an independent pharmacist in Florida.

Federal prosecutors from California and Michigan, the U.S. Justice Department's commercial litigation branch, the National Association of Medicaid Fraud Control Units and the U.S. Health and Human Service Department's inspector general participated in the joint investigation.

Bass and Chin will get about $1.28 million from the United States for their actions under parts of federal and state False Claims Acts statutes, according to the U.S. Justice Department. The federal government will receive just under $7.3 million from Walgreens as part of the settlement, with participating states also receiving some payment from the drugstore chain.

"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," said Stuart F. Delery, acting assistant attorney general with the U.S. Justice Department.

On its website, Illinois-based Walgreens describes itself as the nation's largest drugstore chain with sales last fiscal year of $72 billion and 7,847 drugstores in all 50 states, the District of Columbia and Puerto Rico.