Walgreens has agreed to pay $360 million to settle an arbitration dispute with Humana that has spanned nearly five years. The payout is roughly half of what Walgreens was originally ordered to pay when the issue was first resolved last year.

Humana began the arbitration process in 2019 when it claimed that for more than a decade Walgreens had been charging the company and its beneficiaries “unlawfully inflated” prices for prescriptions. 

The dispute revolved around Walgreens’ Prescription Savings Club, a program aimed at assisting uninsured or underinsured patients in accessing more affordable medications. When submitting reimbursement claims to Humana, the pharmacy chain recorded the standard retail prices for the drugs dispensed under this program as its “usual and customary” rates rather than the special prices, Humana alleged.

In March of last year, an arbiter ordered Walgreens to pay Humana a $642 million award. But Walgreens went on to challenge that award in federal court.

In lawsuit filed in May, Walgreens stated that the arbitration “began in betrayal and ended in a miscarriage of justice.” The pharmacy giant argued that it should not have to pay more than half a billion dollars “when no ordinary reader of the contract at issue would find that Walgreens had done anything wrong, and when the evidence showed Humana was fully aware of Walgreens’ approach and did nothing until solicited by conflicted counsel.”

In a separate May filing, Humana asked the judge to uphold the $642 million award.

U.S. District Judge Ana Reyes dismissed Walgreens’ federal lawsuit on Friday — the day after a Walgreens filing with the Securities and Exchange Commission revealed that the two companies had privately agreed to a new award amount of $360 million on December 29.

Neither Humana nor Walgreens responded to MedCity News’ requests for comment.

Walgreens is still dealing with other court issues related to claims that it has been overcharging payers for prescription drugs. For instance, the pharmacy chain is still defending itself against Blue Cross plaintiffs that allege Walgreens has been knowingly submitting claims with falsely inflated drug prices.

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