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Rite Aid False “Usual and Customary” Drug Prices Class Action

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Pharmacies are supposed to charge insurance companies and customers their “usual and customary” (U&C) price for generic prescription drugs. This is normally the price paid by customers who do not have insurance and who pay cash, but the complaint claims that Rite Aid charges a higher price, in violation of federal and state regulations.

The Nationwide Class for this action is all persons in the US and its territories who, during the applicable liability period, bought and/or paid for some or all of the purchase price for generic prescription drugs that Rite Aid included in its Rx Savings Program formulary for use by themselves or their families, or their members, employees, insureds, participants, or beneficiaries. Alternatively, the complaint proposes a California Class.

Rite Aid is the third-largest retail pharmacy in the US, with pharmacies in thirty-one states. It offers a program called Rx Savings Program (RSP) that allows people without insurance to fill prescriptions for 350 generics at reduced prices—$9.99 for a thirty-day prescription and $15.99 for a ninety-day prescription. The generics on the list include widely-prescribed drugs for cardiovascular problems, diabetes, pain, psychiatric illnesses, and gastrointestinal problems, among other things.

Interestingly, although the RSP is available to all customers paying cash, the complaint says that Rite Aid does not advertise the program and does not inform customers with insurance that prices might be lower if they paid cash. According to the complaint, it also reports higher prices to insurance companies than the RSP price.

The complaint claims that charging higher prices to insured people amounts to punishing people for having insurance.

According to the complaint, U&C is a standard term. The National Council for Prescription Drug Programs (NCPDP), a non-profit program, defines “usual and customary” price as the “amount charged cash customers for the prescription.” The Academy of Managed Care Pharmacy (AMCP) defines it as the “price for a given drug or service that a pharmacy would charge a cash-paying customer without the benefit of insurance…” The Government Accountability Office calls it “the price that an individual without prescription drug coverage would pay at a retail pharmacy.”

The complaint claims that other pharmacies, such as Wal-Mart and Target, report their generic prescription drug discount program prices as their U&C prices.

Unfortunately, the complaint says, people with insurance have no way of knowing that they are being charged higher prices because they are not aware of what cash customers are being charged.

The complaint alleges violation of laws against negligent misrepresentation, unfair competition, and unjust enrichment, among other things.

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