Walgreens fights 'staggering' $642 million arbitration award to Humana

Signage is seen outside of a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City

By Mike Scarcella

(Reuters) - National retail pharmacy giant Walgreen Co has asked a U.S. judge to vacate an arbitrator's award of more than $642 million to Humana Health Plan Inc in a drug-pricing dispute, calling the "staggering" sum the result of a "miscarriage of justice."

Lawyers for Walgreens made their legal challenge in a filing on Friday in Washington, D.C., federal court, in a clash over prescription drug reimbursement contracts between Walgreens and Humana.

Separately, Humana asked the U.S. court to confirm the award. The insurer said Walgreens had submitted "millions of falsely-inflated" prescription drug prices for more than a decade, resulting in significant overcharges for Humana.

Deerfield, Illinois-based Walgreens, a subsidiary of Walgreens Boots Alliance, argued in its filing that the arbitrator who issued the award in March "rewrote" its contracts with Humana. It also accused the arbitrator, from the JAMS arbitration forum, of using a flawed model to assess alleged damages.

In addition, Walgreens claimed that law firm Crowell & Moring should not have been allowed to represent Humana after previously advising Walgreens years earlier on drug pricing matters at the heart of Humana's 2019 arbitration.

"The result was that the arbitrator awarded a massive windfall to Humana," Walgreens' attorneys at Reed Smith said in the court filing.

A spokesperson for Louisville, Kentucky-based Humana on Monday did not immediately respond to a message seeking comment.

A Walgreens spokesperson had no immediate comment.

Walgreens' retail pharmacy recorded $27.6 billion in revenue in the second quarter.

Walgreens separately sued Crowell in 2021 in District of Columbia Superior Court seeking, among other things, indemnification from any arbitral award, an injunction against Crowell and disgorgement of the firm's profits from its work for Humana.

A judge denied Walgreens' early effort to bar Crowell from representing Humana. Walgreens' appeal is pending.

Washington, D.C.-based Crowell has denied any conflict of interest in representing Humana against the law firm's former client Walgreens.

A spokesperson for Crowell on Monday in a statement called Walgreens' ethics claim "meritless" and said the firm was "confident that the arbitrator's thorough and well-reasoned award will be affirmed."

Walgreens in its petition to vacate Humana's award said it had long reported its retail prices as "usual and customary" on reimbursement claims. Walgreens alleged Humana was aware that the pharmacy chain's discount drug-price program was not part of "usual and customary" submissions.

The arbitrator, Elliot Gordon, on Monday did not immediately respond to a message seeking comment.

The case is Walgreen Co v. Humana Health Plan Inc, U.S. District Court, District of Columbia, No. 1:22-cv-00307-ACR.

For Walgreens: Frederick Robinson and Selina Coleman of Reed Smith

For Humana: Keith Harrison and Aryeh Portnoy of Crowell & Moring

Read more:

Walgreens appeals to keep counsel DQ fight out of arbitration

Walgreens lawsuit against Crowell & Moring clears early hurdle

(Reporting by Mike Scarcella)