NASHVILLE -- Walgreens has agreed to stop altering prescriptions without physician approval as part of a multi-state agreement to settle allegations of improper billing, Tennessee Attorney General Bob Cooper has announced.

The agreement resolves claims that Walgreens violated various state and federal statutes and regulations to maximize profits by switching dosage forms of three medications without physician approval.

By switching the drugs commonly prescribed for Medicaid patients, Medicaid programs nationwide ultimately had to pay substantially more for these drugs than they would have.

Walgreens agreed to comply with state and federal laws in addition to paying $35 million to the federal government, 42 states and Puerto Rico.

"'We are pleased with this agreement" Attorney General Bob Cooper said. "We hope this case will help improve market standards and keep anyone from altering medical prescriptions without consulting with the physicians who prescribe medications to their patients."

"The Tennessee Bureau of Investigation has stepped up resources committed to detecting and investigating TennCare fraud during the past two years," said TBI Director Mark Gwynn.

Walgreens, which operates pharmacies in 48 states and Puerto Rico, furnishes pharmacy services to Tennessee's TennCare enrollees. (There is one Walgreens in Greeneville and an another under construction. - Eds)

The settlement is the result of a joint federal-state investigation, which began after a false claims act lawsuit was filed in U.S. District Court in Chicago in 2003.

Generic Zantac, Prozac

The whistleblower's complaint in that action alleged that Walgreens filled prescriptions for numerous Medicaid recipients by aggressively switching dosage forms of ranitidine (the generic form of Zantac, a commonly prescribed anti-ulcer medication) fluoxetine (the generic form of Prozac, an anti-depressant); and selegiline (the generic form of Eldepryl, used in the treatment of Parkinson's disease and senile dementia).

Government investigators contend that these improper switching practices continued from July 2001 through 2005, and that the wholesale substitution of alternate dosage forms of these drugs resulted in higher payments under the automated Medicaid reimbursement system.

This settlement is the latest in a series resulting from investigations of similar conduct by pharmacy providers nationwide. Together, the three cases settled to date have brought back more than $120 million to Medicaid programs around the country.

In addition to the payment of cash settlements to the state and federal governments, Walgreens has agreed to the terms of an agreement with the Office of the Inspector General of the United States Department of Health and Human Services.

That agreement ensures that Walgreens does not switch dosage forms of medications if the result would increase the costs to third-party payers, including Medicaid, and will subject the company's billing practices to ongoing federal scrutiny.

The settlement was the result of negotiations jointly conducted by the United States Attorney's Office for the Northern District of Illinois and the National Association of Medicaid Fraud Control Units, with representatives of the attorneys general of Ohio, Illinois, Massachusetts, Florida and Texas leading the effort for the states.