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The Department of Justice (DOJ) yesterday announced that Rite Aid Corporation has agreed to pay $2.99 million to resolve allegations that it violated the False Claims Act (FCA) by using gift cards to induce Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid.

A whistleblower who brought the allegations under qui tam provisions of the False Claims Act will receive approximately $508,300 as his share of the settlement.

While gift cards are common, this settlement provides a reminder of the need to carefully structure the arrangements in light of concerns that the pharmacy or broader retailer may be viewed as offering the cards in exchange for prescriptions or other business. Glenn R. Ferry of the Department of Health and Human Services Office of Inspector General (OIG) warned that “[p]harmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions” and that “[p]harmacy chains that manipulate patient choices in this way will be held accountable.”

Click here to read the DOJ’s press release.