Kmart agrees to $32.3 million penalty after alleged improper reporting of prescription drug discounts

By Mark Iandolo | Jan 11, 2018

WASHINGTON (Legal Newsline) — The U.S. Department of Justice announced Dec. 22 that Kmart Corporation, a wholly owned subsidiary of Sears Holding Corporation (SHC), will pay $32.3 million after allegations that pharmacies within Kmart stores failed to report discounted prescription drug prices.

Under federal regulations, participating pharmacies must report discounted prescription drug prices to Medicare Part D, Medicaid and TRICARE, the health program for members of the uniformed services and their families.

“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs.” said acting assistant attorney general Chad A. Readler for the department’s Civil Division. “This settlement should put pharmacies on notice there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs.”

The case was handled for the United States by the Justice Department’s Civil Division and the U.S. Attorney’s Offices for the Southern District of Illinois and Central District of California.


“Pharmacies and other providers who receive funds from taxpayers have a duty to follow the law,” said U.S. attorney Donald S. Boyce for the Southern District of Illinois. “If health care providers do not provide fair and transparent pricing as required under the law, the False Claims Act allows the government and whistleblowers to ensure that the Medicare, Medicaid and TRICARE programs are made whole.”

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