A major grocery chain operator has agreed to pay a multimillion-dollar settlement after coming under scrutiny for pricing practices tied to one of its business segments.
The case centers not on what shoppers paid at checkout, but on allegations involving how certain prices were reported behind the scenes.
Federal officials say prescription price reporting practices caused government health care programs to pay more than they should have, resulting in a settlement worth tens of millions of dollars.
The case highlights how prescription pricing disclosures can affect taxpayer-funded health care spending, even when consumers receive discounted pharmacy prices.
Ahold Delhaize agrees to $40M settlement over prescription price data
Ahold Delhaize USA (ADRNY) has agreed to pay $40 million to resolve allegations that it submitted inflated prescription drug pricing data to federal health care programs, according to the U.S. Department of Justice (DOJ).
The company operates supermarket chains, including Giant, Hannaford, Stop & Shop, and Food Lion, many of which offer prescription savings programs that provide discounted pricing to enrolled customers.
Federal authorities alleged Ahold Delhaize did not report discounted prescription prices as its “usual and customary” rates when billing Medicare Part D, Medicaid, and Tricare. According to the government, the reporting led the programs to reimburse pharmacies at higher amounts than they otherwise would have paid.
The settlement relates to pharmacy billing practices and does not involve consumer pricing at grocery stores.
The details appear in a settlement announcement released by the Justice Department.
“Federal healthcare programs rely on pharmacies reporting accurate pricing information used in the applicable payment formulas,” Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division said in a statement.
Shumate added that when pharmacies report inflated “usual and customary” prices, federal health care programs ultimately pay more than they should.
Scott J. Lampert, acting deputy inspector general for investigations at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), said inaccurate pricing practices can undermine the integrity of taxpayer-funded health care programs.
How the Ahold Delhaize settlement will be distributed
The allegations were initially brought forward by whistleblower Lawrence LaBenne, a pharmacist who worked at an Ahold Delhaize supermarket location in Pennsylvania.
Under the civil settlement agreement, LaBenne will receive more than $6 million for reporting the alleged conduct.