IN THE UNITED STATES DISTRICT COURT 

 FOR THE NORTHERN DISTRICT OF ILLINOIS 

 EASTERN DIVISION

UNITED FOOD AND COMMERCIAL ) 

WORKERS UNIONS AND EMPLOYERS ) 

MIDWEST HEALTH BENEFITS FUND, ) 

individually and on behalf of all others similarly ) 

situated, ) 

) 

Plaintiff, ) No. 

) 

v. ) 

) 

WALGREEN COMPANY, PAR ) 

PHARMACEUTICAL COMPANIES, INC., and ) 

PAR PHARMACEUTICAL, INC., ) 

) JURY TRIAL DEMANDED

Defendants. ) 

__________________________________________) 

CLASS ACTION COMPLAINT

 

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TABLE OF CONTENT

NATURE OF THE ACTION .........................................................................................................1 

JURISDICTION AND VENUE ......................................................................................................3 

THE PARTIES ................................................................................................................................3 

FACTUAL ALLEGATIONS ..........................................................................................................5

A. Prescription Drugs .........................................................................................................5 

B. Pharmacy Reimbursement for Prescription Drugs ........................................................7 

C. Ranitidine .....................................................................................................................10 

D. Fluoxetine ....................................................................................................................11 

E. Defendants’ Schemes to Unlawfully Overcharge Third-Party Payors ........................12 

Defendants Switched Ranitidine Tablets to Capsules ..........................................12 

Defendants Switched Fluoxetine Capsules to Tablets ..........................................20 

F. UFCW has been Injured in its Business and Property ...............................................28 

UFCW’s Ranitidine Transactions ................................................................................29 

 (1) Ranitidine Capsules Were More Expensive Than Ranitidine Tablets ......29 

(2) Walgreens Dispensed the More Expensive Ranitidine Capsules to UFCW 

Members 91.8% of the time, while Other Leading Pharmacy Chains 

Dispensed the More Expensive Capsules Less than 1% of the time. .......31 

UFCW’s Fluoxetine Transactions ................................................................................35 

 (1) Fluoxetine Tablets Were More Expensive Than Fluoxetine Capsules ......35 

(2) Walgreens Dispensed the More Expensive Fluoxetine Tablets to UFCW 

Members 92.8% of the time, while Other Leading Pharmacy Chains 

Dispensed the More Expensive Capsules Less than 10% of the time. .....38 

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THE DISCOVERY RULE AND TOLLING OF THE STATUTES OF LIMITATIONS ............41 

CLASS ALLEGATIONS ..............................................................................................................42 

COUNT I 

VIOLATION OF 18 U.S.C. § 1962(c) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Walgreens) .....................................................................................................................45 

COUNT II 

VIOLATION OF 18 U.S.C. § 1962(c) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Par) .................................................................................................................................56 

COUNT III 

VIOLATION OF 18 U.S.C. § 1962(d) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Walgreens) .....................................................................................................................67 

COUNT IV 

VIOLATION OF 18 U.S.C. § 1962(d) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Par) .................................................................................................................................68 

JURY TRIAL DEMANDED .........................................................................................................70

TABLE OF EXHIBITS .................................................................................................................71

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 Plaintiff, United Food and Commercial Workers Unions and Employers Midwest Health 

Benefits Fund (“Plaintiff” or “UFCW”), individually and on behalf of all others similarly 

situated, brings this Complaint based upon knowledge as to itself and its own acts and, as to all 

other matters, upon information and belief based on the investigation of counsel, including the 

matters of public record in the actions styled United States of America ex rel. Bernard Lisitza v. 

Walgreen Co., No. 03-C-00744 (N.D. Ill.) and United States of America ex rel. Bernard Lisitza 

v. Par Pharmaceutical Companies, Inc., et al., No. 06-c-6131 (N.D. Ill.). 

NATURE OF THE ACTION

1. Defendant Walgreen Company (“Walgreens”) operates more than 7,000 

pharmacies in forty-nine (49) states, the District of Columbia and Puerto Rico. Defendants Par 

Pharmaceutical, Inc. and Par Pharmaceutical Companies, Inc. (collectively “Par”), market and 

sell generic drugs, including generic versions of the highly prescribed brand name drugs Zantac 

(known generically as ranitidine HCl or “ranitidine”) and Prozac (known generically as 

fluoxetine hydrochloride or “fluoxetine”). 

2. As alleged herein, Walgreens and Par engaged in at least two widespread schemes 

to overcharge insurance companies, self-insured employers and union health and welfare funds 

(collectively referred to as Athird-party payors@ or ATPPs@), for the generic versions of Zantac, 

Prozac, and other drugs. Walgreens and Par established the “Walgreens/Par/Hrp” (i.e., health 

resource partnership) whereby Par manufactured and/or marketed generic versions of Zantac and 

Prozac in dosage forms that were not subject to strict private and governmental reimbursement 

limitations. Walgreens purchased these dosage forms from Par -- at a cost substantially higher 

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than the widely prescribed dosage forms -- and systematically and unlawfully filled its 

customers’ prescriptions with Par’s more expensive products, rather than the inexpensive dosage 

forms that were prescribed by physicians. 

3. This enabled Walgreens to achieve a higher mark-up, thereby recovering its costs 

and increasing its profits on these pharmaceuticals. For example, even though a pharmacy 

cannot legally change a prescription without a physician=s express authorization, Walgreens 

filled prescriptions written for low-priced 150-mg ranitidine tablets with much more expensive 

150-mg ranitidine capsules manufactured by Par. This scheme enabled Walgreens and Par to 

garner unlawful profits by illegally changing prescriptions. As a result of this unlawful conduct, 

Plaintiff and other third-party payors paid two to four times more than they would have had the 

prescriptions been filled as written. Plaintiff asserts causes of action for violation of the 

Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and (d). 

4. On June 4, 2008, the United States Department of Justice announced Walgreens’ 

agreement to pay $35 million to the United States, 42 states and Puerto Rico for overcharging 

state Medicaid programs by filling prescriptions with the more expensive dosage forms of 

ranitidine and fluoxetine. The government claims were asserted in a “whistleblower” lawsuit 

styled United States of America ex rel. Bernard Lisitza v. Walgreen Co., No. 03-C-00744 (N.D. 

Ill.). 

5. On July 19, 2011, a whistleblower lawsuit against Par and related parties was 

unsealed. United States of America ex rel. Bernard Lisitza v. Par Pharmaceutical Companies, 

Inc., et al., No. 06-c-6131 (N.D. Ill.). The unsealed pleadings publically revealed many details 

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and internal workings of Walgreens’ and Par’s schemes, including documents demonstrating the 

nature and extent of Walgreens’ and Par’s fraudulent activities. Many of the documents are 

attached to this Complaint as Exhibits 1 through 25 and incorporated herein. 

JURISDICTION AND VENUE

6. This court has federal question jurisdiction under 28 U.S.C. § 1331 and 18 U.S.C. 

§ 1964(a) because Plaintiff’s complaint asserts causes of action for violations of 18 U.S.C. § 

1962.

7. Venue is proper within this District under 28 U.S.C. § 1391(b) and 18 U.S.C. § 

1965(a) because Defendants are found in or transact business within this District, and the 

interstate trade and commerce, hereinafter described, is carried out, in substantial part, in this 

District. 

THE PARTIES

 Plaintiff

8. Plaintiff United Food and Commercial Workers Unions and Employers Midwest 

Health Benefits Fund is an “employee welfare benefit plan” and “employee benefit plan” 

maintained pursuant to § 302(c)(5) of the Labor Management Relations Act (“LMRA”), 29 

U.S.C. § 186(c)(5), and as defined by § 1002(1) and (3) of the Employee Retirement Income 

Security Act (“ERISA”), 29 U.S.C. §§ 1001, et seq. As such, UFCW is a legal entity that may 

bring suit in its own name pursuant to 29 U.S.C. § 1132(d). UFCW’s offices, from which it pays 

medical benefits, including benefits for prescription drugs, is located in Cook County, Illinois. 

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9. Pursuant to the Trust Agreement under which it was created, UFCW provides 

comprehensive health care benefits to approximately 15,000 participants and family members. 

10. UFCW’s health and medical benefits are provided under a written benefit plan. 

The plan contains certain subrogation provisions under which UFCW is subrogated to and 

assigned the rights and causes of actions of its participants and beneficiaries for whom it pays 

benefits. During the Class Period described below, many of UFCW’s participants and 

beneficiaries purchased Par’s ranitidine capsules and fluoxetine tablets at Walgreens. UFCW, as 

a TPP, paid Walgreens for the cost of Par’s ranitidine capsules and fluoxetine tablets, less a 

participant’s copayment amount. UFCW has thereby been injured as a result of Defendants’ 

unlawful conduct. 

 Defendants

11. Walgreen Company d/b/a Walgreens is an Illinois corporation headquartered in 

Deerfield, Illinois. Walgreens operates approximately 7,000 retail pharmacies stores in 49 states, 

the District of Columbia, and Puerto Rico. 

12. Par Pharmaceutical Companies, Inc. and its wholly owned subsidiary Par 

Pharmaceutical, Inc. (collectively “Par”), are Delaware corporations with their corporate 

headquarters in Woodcliff Lake, New Jersey. Par has additional facilities for research, 

manufacturing and distribution in Suffern, New York and Spring Valley, New York. Par 

develops, manufactures, markets and distributes pharmaceutical products, including generic 

pharmaceuticals. Par is currently the fifth largest generic drug manufacturer in the United States 

with annual sales of approximately $430 million.

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FACTUAL ALLEGATIONS

A. Prescription Drugs

13. Under the federal Food, Drug, and Cosmetic Act, 21 U.S.C. ' 301, et seq., (the 

AFDCA@), a manufacturer must obtain approval from the FDA before a new drug can be 

manufactured and sold. A manufacturer seeks approval for a new drug, often referred to as a 

Apioneer drug,@ by filing a New Drug Application (ANDA@) with the FDA demonstrating that the 

drug is safe and effective for its intended use. New drugs that are approved for sale in the United 

States by the FDA are typically covered by patents and marketed under a brand name. 

14. The drugs at issue in this action were available as generics throughout the Class 

Period. Generic drugs are drugs which the FDA has found to have the same active chemical 

composition and to provide the same therapeutic effects as the pioneer, brand name drug. When 

a generic drug is bioequivalent to a pioneer or brand name drug, the FDA assigns the generic 

drug an AAB@ rating. According to the FDA, a bioequivalent drug rated AAB@ may be used and 

substituted interchangeably with the referenced branded drug. 

15. Once the safety and effectiveness of a new drug is approved by the FDA, it may 

be used in the United States only under the direction and care of a physician who writes a 

prescription, specifying the drug by name. The drug may then be purchased from a licensed 

pharmacist, at a pharmacy such as Walgreens. The pharmacist must, in turn, fill the prescription 

with the drug specified by the physician, unless an AB-rated generic version of that pioneer drug 

which has been approved by the FDA is available. For instance, once a physician writes a 

prescription for a brand-name drug such as Zantac, that prescription can be filled only with the 

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brand-name drug named or its AB-rated generic equivalent. Only generic drugs that carry the 

FDA=s AAB@ rating may be substituted by a pharmacist for a doctor=s prescription for a brand 

name drug. 

16. If an AB-rated generic formulation of a brand name drug exists and the physician 

has not specifically indicated on the prescription ADAW@ or Adispense as written@ (or similar 

indications, the wording of which varies slightly from state to state), then: (a) for consumers 

covered by insurance that includes a prescription benefit plan, the pharmacist will substitute the 

generic drug; and (b) for consumers whose purchases are not covered by prescription drug 

benefit plans, the pharmacist will offer the consumer the choice of purchasing the AB-rated 

generic drug at a lower price. 

17. Shortly before Defendants’ drug switching schemes were implemented, the FDA 

confirmed the distinction between tablets and capsules and rejected the proposition that tablets 

and capsules are interchangeable. On December 1, 2000, after public notice and comment, the 

FDA denied a proposal from pharmaceutical manufacturers requesting that the FDA consider 

tablets and capsules as equivalents. 

In sum, the FDA has concluded that patients and healthcare practitioners have a 

significant interest in, and legitimate concerns regarding, the form of oral drug 

products, and that tablets and capsules, while similar in many respects, have 

special properties that may make one or the other more advantageous in the 

treatment of certain patients. Tablets and capsules, therefore, should not be 

regarded as the same form. 

Exhibit 1 (Letter from Janet Woodcock, M.D., FDA Center for Drug Evaluation and Research, 

December 1, 2000) (emphasis in original). 

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18. Even when drugs are AB-rated by the FDA, state law generally allows 

substitution only when it will result in a lower price to the consumer or third-party payors. 

Illinois law, for example, provides that: 

if the physician or other authorized prescriber, when transmitting an oral or 

written prescription, does not prohibit drug product selection, a different brand 

name or nonbrand name drug product of the same generic name may be dispensed 

by the pharmacist, provided that the selected drug has a unit price less than the 

drug product specified in the prescription. 

225 ILCS 85/25 (emphasis added). Other states have similar laws. 

B. Pharmacy Reimbursement for Prescription Drugs

19. Retail pharmacies, such as Walgreens, fill prescriptions for customers with and 

without prescription benefits coverage. Those customers who have private insurance (as 

opposed to government programs such as Medicaid) get prescription drug coverage from 

insurance companies, self-insured employers or union health and welfare funds. While those 

customers usually pay a copayment (or “co-pay”) for prescription drugs, the remainder of the 

price of the drug is paid by the TPP. During the Class Period, the vast majority of consumers 

had some type of prescription drug coverage. Indeed, nearly 80% of a pharmacy’s revenue 

comes from prescriptions that are paid for in part by private insurance and approximately 64% of 

all money paid for prescription drugs is paid by TPPs. Pharmacies are very aware of how they 

are paid for prescriptions covered by insurance.

20. The focus on insured customers has had a significant impact on pharmacy 

management. While pharmacies determine what price they will charge insured customers, TPPs 

and pharmacy benefit managers (or “PBMs”) acting on behalf of TPPs establish the rate at which 

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TPPs will reimburse pharmacies for prescriptions. Pharmacies usually are not allowed to charge 

more than an established reimbursement rate. 

21. PBMs contract with third-party payors or health-plan administrators, such as 

insurers, HMOs, and employers, to facilitate delivery of prescription drugs to the health-plan 

members or other individuals to whom the third-party payors provide prescription drug benefits. 

PBMs create pharmacy networks by negotiating with retail pharmacies that agree to accept 

defined reimbursement rates when they fill prescriptions for health-plan members. PBMs assist 

third-party payors and health-plan administrators by “adjudicating” claims for prescription drug 

benefits submitted by pharmacies, thereby acting as intermediaries between the third-party 

payors and pharmacies in providing pharmacy benefits. “Adjudicate” is a term of art in the PBM 

industry for processing claims over the PBMs’ various computer systems. Third-party payors, 

such as UFCW, pay pharmacies directly to reimburse for their members’ purchases of 

prescription drugs, using PBMs and their adjudication processes as conduits and payment agents 

for such payments. 

22. The reimbursement rate, or price, for a third-party prescription is based on a 

reimbursement-rate formula that is specified in the contract between the pharmacy and TPP, or 

between the pharmacy and the PBM on behalf of the TPP. The reimbursement-rate formula 

almost universally consists of two parts: the ingredient cost and the dispensing fee. The 

ingredient cost is intended to pay the pharmacy for the cost of the drug product, and the 

dispensing fee is intended to cover the cost of dispensing the prescription. 

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23. In the case of generic drugs that are available from more than one source, 

ingredient cost is, in most cases, based on a Maximum Allowable Cost, or “MAC.” The MAC 

for a particular drug is set by a TPP or PBM and represents the most the payor will reimburse the 

pharmacy for that drug regardless of which manufacturer=s version of the drug is dispensed. The 

federal government also calculates and publishes a list of MACs for selected generic drug 

products, and some third-party payors, rather than developing their own, proprietary MACs, use 

the federal MAC lists. Since PBMs usually pay pharmacies at MAC, TPPs in turn reimburse at 

MAC plus a certain percentage. 

24. MAC prices are based on information that third-party payors and PBMs gather in 

the marketplace about prices. MAC pricing is usually updated regularly in order to 

accommodate, among other things, the entrance and exit of various generic competitors from a 

given market. 

25. In general, TPPs and PBMs set MACs by gathering the prices of each 

manufacturer’s version of a generic drug. They then decide, using a formula based on Average 

Wholesale Price (“AWP”), the maximum amount they are willing to pay a pharmacy for any 

manufacturer’s version of the generic drug. That amount becomes the MAC for all versions of a 

generic drug. AWP is a benchmark price published by drug manufacturers but used as the basis 

for third-party payors’ pharmacy reimbursements. While AWP remains the standard benchmark 

for reimbursement of brand drugs, AWP is used as the benchmark for reimbursement of generic 

drugs in the private marketplace only when there is no MAC price available. While MACs are 

set based on actual prices in the marketplace, AWPs are benchmark prices that often bear no 

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resemblance to prices in the marketplace. See In re Average Wholesale Price Litig., 491 F. 

Supp. 2d 20, 33 (D. Mass. 2007). Thus, pharmacies like Walgreens make more profit on 

generics that are priced based on AWP, as compared to generics that are subject to MAC pricing 

limits. Likewise, TPPs pay far less for generics that are subject to MAC-based pricing. 

26. MAC-based reimbursement is designed to reduce the uncertainty that can be 

associated with generic pricing. For example, absent MAC pricing, a third-party payor could 

pay $10.00 for one generic version of a drug, while paying $15.00 for another version. 

27. While TPPs and PBMs provide their MAC lists to pharmacies like Walgreens so 

that pharmacies can price based on those MACs, TPPs and PBMs consider their proprietary 

MAC lists to be highly confidential. Those TPPs who do not develop their own MAC lists 

generally do not have access to the MAC lists developed by their PBMs. Indeed, they may not 

even know the methodology used by PBMs to develop those proprietary MAC prices. 

C. Ranitidine

28. Ranitidine was developed by Glaxo (now GlaxoSmithKline) and introduced under 

the brand-name Zantac in 1981. Zantac went off-patent in July 1997 and numerous 

manufacturers launched generic versions of the drug. The most popular dosage forms of 

ranitidine are 150-mg and 300-mg tablets, which are manufactured and marketed by several 

firms. Par was one of only a few manufacturers to market 150-mg and 300-mg ranitidine 

capsules. Ranitidine tablets and ranitidine capsules contain the same active ingredient, but 

because they are different forms, they are not AB-rated bioequivalents. Accordingly, a 

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pharmacist cannot fill a prescription for Zantac or ranitidine 150-mg or 300-mg tablets with 

capsules, or vice versa, without express written authorization from the prescribing physician. 

29. With several manufacturers producing ranitidine tablets, and tablets being the 

most popular dosage form, third-party payors and PBMs adopted MACs specifying the amounts 

that they were willing to pay or reimburse for ranitidine tablets. MACs were not adopted for 

ranitidine capsules, however, because they were produced by only a few manufacturers and were 

rarely prescribed. Accordingly, payment and reimbursement for ranitidine capsules generally 

involves application of an AWP-based formula, making ranitidine capsules much more 

expensive than ranitidine tablets. 

D. Fluoxetine

30. Fluoxetine hydrochloride (which has been sold under brand-names including 

Prozac and Sarafem) is a widely-prescribed antidepressant developed by Eli Lilly and Company. 

Eli Lilly=s patent on fluoxetine expired in August 2001, prompting an influx of generic versions 

of the drug onto the market. The most popular dosage forms of fluoxetine are 10-mg and 20-mg 

capsules, which are manufactured and marketed by several firms. Alphapharm Pty Ltd. 

(“Alphapharm”) and Genpharm ULC (“Genpharm”) were among only a few manufacturers to 

produce 10-mg and 20-mg fluoxetine tablets. Alphapharm and Genpharm provided Par 

exclusive sales and distribution rights in the United States. Fluoxetine capsules and fluoxetine 

tablets contain the same active ingredient, but because they are different forms, they are not ABrated bioequivalents. Accordingly, a pharmacist cannot fill a prescription for Prozac or 

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fluoxetine 10-mg or 20-mg capsules with tablets, or vice versa, without express written 

authorization from the prescribing physician. 

31. With several manufacturers producing fluoxetine capsules, and capsules being the 

most popular dosage form, third-party payors and PBMs adopted MACs specifying the amounts 

that they were willing to pay or reimburse for fluoxetine capsules. MACs were not adopted for 

fluoxetine tablets, however, because they were produced by only a few manufacturers and were 

rarely prescribed. Accordingly, payment and reimbursement for fluoxetine tablets generally 

involves application of an AWP-based formula, making fluoxetine tablets much more expensive 

than fluoxetine capsules. 

E. Defendants’ Schemes to Unlawfully Overcharge Third-Party Payors

32. Starting in April 1999 through December 31, 2006, Par and Walgreens conspired 

to increase their profits through at least two schemes to illegally fill prescriptions with Par’s 

higher-priced products rather than the specific drugs prescribed by physicians. These schemes 

were purposefully designed to evade price limits on generic drugs. 

Defendants Switched Ranitidine Tablets to Capsules 

33. Par implemented a fraudulent scheme to evade reimbursement limits for tablets of 

ranitidine, the generic form of the brand-name antacid Zantac. Doses of 150-mg and 300-mg of 

ranitidine require a prescription. Par caused Walgreens and other pharmacies to fill prescriptions 

for Zantac and ranitidine tablets with Par’s capsules because of the huge profits to be made by 

making the switch. 

34. Brand-name Zantac and generic ranitidine are prescribed almost exclusively in 

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tablet form. Indeed, from January 1, 2000 through May 31, 2001, 100% of the 17,945 units of 

ranitidine prescriptions filled by UFCW members at Walgreens were filled with ranitidine 

tablets. See ¶ 97, infra. On April 6, 2000, the Centers for Medicare & Medicaid Services

(“CMS”) announced that they were setting a Federal Upper Limit (“FUL”) for ranitidine tablets. 

Par saw the opportunity to profit by evading this limit through a scheme to fill ranitidine tablet 

prescriptions with Par’s ranitidine capsules. 

35. After the CMS announcement, Par attempted to persuade Walgreens and other 

pharmacies to fill all Zantac and ranitidine prescriptions with Par’s ranitidine capsules. Par made 

presentations, distributed flyers, and used other methods to convince pharmacies to participate in 

the switching scheme to evade the upcoming Medicaid price limits and similar MAC limitations 

that would be adopted by private health benefits plans and pharmacy benefits managers. 

36. Par’s marketing presentation to Walgreens, prepared in November 2000 by Par’s 

executive vice-president of sales and marketing, Nick DiMaio, explained how Walgreens could 

make over $75 million in additional profits by filling prescriptions for Zantac and ranitidine 

tablets with Par’s ranitidine capsules, even though Par’s capsules would cost Walgreens 

considerably more than the competing tablets. Par’s president at the time, Scott Tarriff, was also 

directly involved in marketing the scheme to Walgreens. 

37. Par’s “Walgreens Ranitidine Analysis,” attached as Exhibit 2 [PAR-TX 

0000163], showed that Par planned to charge Walgreens five times more for its form of 

ranitidine. Walgreens’ acquisition cost would be 9.5 cents for each Par capsule but only 1.9 

cents for a competitor’s tablet, for a per-prescription acquisition cost of $5.70 for Par’s capsule 

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versus only $1.14 for a tablet. Id. 

38. As part of its Walgreens Ranitidine Analysis, Par highlighted the upcoming 

Medicaid price limits for ranitidine tablets, known as the “Proposed HCFA MAC.” HCFA was 

the acronym for the federal Health Care Finance Administration of the Department of Health and 

Human Services (now known as the Centers for Medicaid and Medicare Services or CMS). The 

MAC is the Maximum Allowable Cost, a Medicaid price limit set for generic drugs reimbursed 

by the state Medicaid programs. 

39. Par explained to Walgreens that, while Par’s capsules would cost more, there 

would be a MAC price limit for tablet reimbursements but there would be no such 

reimbursement limit for Par’s capsules. Medicaid would pay Walgreens $71.45 per prescription 

for Par’s capsules, but only $5.35 for a tablet prescription. Par’s analysis showed that by 

evading the MAC on ranitidine tablets, Walgreens could make a profit of $65.75 for each Par 

capsule prescription, compared to a profit of only $4.21 for each tablet prescription. Although it 

would pay five times more for Par’s capsules, Walgreens would make 15 times more profit. Id.

40. Par’s Walgreens Ranitidine Analysis was so detailed that it calculated Walgreens 

annual ranitidine prescriptions to be 1,222,917. Par projected that Walgreens would make 

$80,400,656 in profits by instituting the capsule switching scheme, but only $5,143,588 by 

dispensing the prescribed tablets. Id. 

41. Nick DiMaio, Par’s top marketing executive, was often assisted at these 

presentations by Julie Trendowicz, Par’s vice president of sales and marketing. In an interview 

with the FBI, Trendowicz confirmed Par’s marketing plan for evading MAC price limits: 

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Q. Well, when you go in and offer the product, you market it on the basis 

of there being a MAC on the competition, as opposed to the product that 

Par wishes to sell, don’t you? 

[Objection omitted.] 

THE WITNESS: If we offer that program to [Walgreens], yes, that’s 

what we would have. 

Exhibit 3 [Day 2, p. 456-57, lines 20-26]. 

42. In a May 15, 2001 email, Bill Groth, Walgreens’ divisional manager for 

pharmacy purchasing, wrote that: 

Since these items [i.e., ranitidine 150mg and 300mg] are highly competitive 3rd 

party payors and the government have created MAC (maximum allowable cost) 

pricing which limits our reimbursement. . . . By switching to a capsule dosage 

form we have discovered that there are not currently constraints on MAC. . . .At a 

50% conversion rate increased GP [gross profit] dollars could achieve 

approximately $1.66MM per month. . . . 

Exhibit 4 [W 11022]. 

43. Groth later testified about this email and specifically how he came to know about 

the lack of a MAC on Par’s ranitidine capsules: 

Q. Further down in the email, you wrote: “Since these items are highly 

competitive, third-party payers and governments have created MAC’s which 

limits our reimbursement.” And then you stated that by switching to the capsule, 

you’ve discovered there are no constraints on the MAC. How did you discover 

that there were no constraints on the MAC? 

A. I believe that, again, was presented by Par Pharmaceutical. 

Exhibit 5 [p. 34, lines 5-15]. 

44. To facilitate the ranitidine switching scheme, Walgreens and Par established the 

“Walgreens/Par/Hrp” (i.e., health resource partnership). As part of this partnership, Par 

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marketed ranitidine capsules as if they were bioequivalent to, and thus legally interchangeable 

with, ranitidine tablets, when in fact they were not. Exhibit 7 [W 00066-70]. Walgreens agreed 

to buy Par’s ranitidine capsules for the purpose of engaging in the switching scheme. 

45. In a company-wide email sent on July 12, 2001, Tom Lawlor, Walgreens’ 

director of pharmacy marketing, announced the switching program: 

On Tuesday, July 16, 2001, we will begin automatically switching all 

prescriptions for ranitidine 150 mg and 300 mg tablets (Mylan) to ranitidine 150 

mg and 300 mg capsules by Par Labs. Brand name prescriptions for Zantac 

tablets will also be converted to the new dosage form when the respective generic 

is dispensed. 

Ranitidine capsules by Par are AB rated generic products. All stores have been 

set distributions of Ranitidine capsules based on their movement of Ranitidine 

tablets. 

To ease the conversion to Ranitidine capsules, Ranitidine tablets will continue to 

be available from your servicing distribution center for a time. Many 

circumstances and considerations were involved in making the decision to convert 

to Ranitidine capsules and all operational concerns involving these conversions 

have been addressed. 

WIC numbers for these new generic dosage forms are as follows: 

Ranitidine 150mg capsules by Par in 60s = 676816 

Ranitidine 300mg capsules by Par in 30s = 676815 

This will provide a unique opportunity to have meaningful conversation with your 

patients and assure them their medication is exactly the same and that the only 

change is the capsule dosage form. Our patients have come to rely on you, their 

Walgreen pharmacist, to provide quality generic products and information in a 

professional manner – this opportunity is no exception. 

Thank you. 

Exhibit 6 [W 04526] (emphasis added). 

 

46. By July 2001, Walgreens had configured its Intercom Plus pharmacy computer 

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system so that all prescriptions for Zantac or generic ranitidine were automatically filled with 

Par’s ranitidine capsules. Walgreens made ranitidine capsules the only form of generic ranitidine 

readily available to its retail customers, despite the fact that it was dispensing a drug that was not 

legally substitutable for ranitidine tablets. 

47. Walgreens required its pharmacy employees to fill all Zantac or ranitidine 

prescriptions (including refills) with Par’s capsules regardless of what had been prescribed and in 

violation of federal and state law and regulations. Walgreens did not have a system to obtain 

physician or patient authorization for the drug switching, or even a system to notify the physician 

or patient that a different drug had been dispensed. 

48. Tom Lawlor’s July 12, 2001 company-wide email, quoted in full above, falsely 

informed Walgreens’ pharmacists that “ranitidine capsules by Par are AB rated generic 

products.” Exhibit 6 [W 04526]. In July 2001, Lawlor’s false assertions about the 

bioequivalency of Par’s capsules to tablets came to the attention of the Illinois Department of 

Public Health (“IDPH”). On July 25, 2001, the IDPH issued a written rebuke to Walgreens, 

concluding that: 

Your communication to Walgreen pharmacists indicated that the ranitidine 150 

mg and 300 mg capsules intended to be dispensed by Walgreen pharmacists were 

“AB rated generic products.” Please note that the Par ranitidine 150 mg and 300 

mg capsules are only rated equivalent to other manufacturers’ ranitidine capsules

listed in the current edition of the FDA’s publication, Approved Drug Products 

with Therapeutic Equivalence Evaluations. 

* * * 

To infer that Par ranitidine capsules are “AB rated generic products” with any 

manufacturer’s ranitidine tablets is false and deceptive. 

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Exhibit 8 [W 00191-92] (emphasis in original). 

49. Notwithstanding the warning from the IDPH, Walgreens pharmacies throughout 

the country continued to unlawfully substitute ranitidine capsules for ranitidine tablets and 

charge third-party payors amounts far in excess of the MAC for ranitidine tablets. 

50. In 2004, after learning that it was under federal investigation for the illegal 

switching scheme, Walgreens decided to phase out the ranitidine switching. On August 24, 

2004, Bill Groth, Walgreens’ divisional manager for pharmacy purchasing, sent an email to 

George Riedl, Walgreens’ senior vice-president of the drug store marketing division, which 

stated: 

FYI. . . .John Ziebell and myself, along with Tom Lawlor had a second meeting 

with [Walgreens in-house counsel] Bryan Schneider in regard to questions and 

concerns from government agencies on ranitidine and fluoxetine dosage form 

conversions. These agencies suggest we are actively switching dosage forms and 

thus the states are paying higher reimbursement which they view as overcharges 

to the public. Additionally, they suggest our pharmacists are not calling for 

physician approval. Today’s meeting was as a result of discussions Bryan has had 

with others within our company and outside counsel and ultimately that groups 

[sic] recommendation to adjust our policy. 

Exhibit 9 [W 05218-19]. 

51. As a result of this meeting, beginning in September 2004, Walgreens began to 

“quietly” fill customers’ new ranitidine prescriptions with ranitidine tablets instead of Par’s 

capsules. 

52. On November 17, 2004, Lawlor explained in an email: 

On the advice of in-house and outside counsel due to 3 state attorneys general and 

the US AG suing us — we were advised to quietly convert to the same dosage 

forms. There is an estimated $5 million hit to the company per year in GP. This 

decision did not come easily or lightly and was made in FY 2005 — not ‘04. 

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Exhibit 10 [W 09542]. 

53. Because of the lower revenues associated with switching back to tablets, 

Walgreens approached Par for a future price reduction on several drugs, including ranitidine, so 

it could recoup lost profits. In a September 21, 2004 email, Frank DeStefano, Walgreens’ 

general merchandise manager, explained: 

FYI. . . .As discussed in the Divisional Review, the impact of the tab-to-tab and 

cap-to-cap cross reference on ranitidine and fluoxetine is estimated at a gross 

profit loss of about $9.94 M for FY 2005. In anticipation of this and in order to 

defray the loss, John Ziebell has gone to Par and Teva to obtain lower costs on 

both capsules AND tablets for both entities. 

Exhibit 11 [W 05260]. 

54. To get the price reduction, Walgreens contacted Julie Trendowicz, Par’s vice 

president of sales and marketing, who had responsibility for the Walgreens account and who had 

participated in the switching pitch made to Walgreens. Trendowicz agreed to the price 

reductions referenced in DeStefano’s email. 

55. Getting this price reduction had a significant favorable impact on Walgreens’ 

profit losses. As DeStefano explained in an email to John Ziebell and Heather Zenk: 

Your work on getting price reductions on fluoxetine and ranitidine in response to 

the 8/27 change in the cross reference on Intercom Plus helped us recover 

approximately $2.2M annually (defrayed the estimated annual profit loss of 

$9.94M down to $6.73M) for the company. 

OUTSTANDING JOB. . .THANK YOU!!!! 

Exhibit 11 [W 11048]. 

56. Thus, Par not only conspired with Walgreens to implement the switches, it also 

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paid millions to reverse the financial consequences after Walgreens decided, under pressure from 

governmental investigations, to begin discontinuing the illegal switching. Par knew that 

Walgreens continued to refill prescriptions with capsules for current customers in 2004. 

Defendants Switched Fluoxetine Capsules to Tablets 

57. Par also implemented a fraudulent scheme to evade reimbursement limits for 

fluoxetine capsules, the generic form of the brand-name anti-depressant Prozac. Par convinced 

Walgreens to buy tablets by promoting the huge profits to be made by participating in this illegal 

drug switching scheme. 

58. During the relevant time period, both brand-name Prozac and generic fluoxetine 

were prescribed almost exclusively in capsule form. In its 20-mg strength, Prozac was only 

available as capsules. Eli Lilly, the manufacturer of Prozac, made a 10-mg tablet, but never 

marketed a 20-mg tablet. Thus, prior to Prozac losing its patent protection on August 1, 2001, all 

prescriptions for Prozac 20-mg were filled with capsules. Prescriptions for Prozac 10-mg were 

typically filled with capsules as well. Accordingly, with the expiration of Eli Lilly’s Prozac 

patent looming, numerous generic manufacturers submitted applications to the FDA in order to 

sell fluoxetine capsules. 

59. Generic manufacturers Alphapharm and Genpharm, on the other hand, began to 

develop fluoxetine 10-mg and 20-mg tablets, and gave Par the exclusive sales and distribution 

rights in the United States. Par developed a marketing campaign for fluoxetine tablets, targeting 

patients, physicians, pharmacists and pharmacies. 

60. Walgreens’ Bill Groth, divisional manager for pharmacy purchasing, confirmed 

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that Par proposed the fluoxetine capsule to tablet switch: 

Par presented. . . .that they were coming out with a [fluoxetine] tablet and would 

we be interested in making that conversion from a [Prozac] capsule in this case 

back to a tablet on the fluoxetine tablets. 

Exhibit 5 [pp. 40-41]. 

61. Par claimed that fluoxetine tablets were easier to swallow than capsules despite its 

own contrary marketing for ranitidine emphasizing that capsules were easier to swallow. For 

example, in ads and in a presentation to pharmacy customers for fluoxetine tablets, Par claimed 

that “[Fluoxetine’s] small size makes tablets easier to swallow” and that “patients prefer tablets 

over capsules when they have a preference between the two dosage forms.” Exhibit 12 [PARTX 0006383] 

62. At the same time, when promoting ranitidine capsules, Par claimed that capsules 

were “easier to swallow.” Exhibit 7 [W 00068]. 

63. But in sworn testimony, Par Vice President Trendowicz confirmed that fluoxetine 

tablets were marketed by comparing “a Par product that was not subject to a MAC versus a 

comparison of a non-Par product that was subject to a MAC.” Exhibit 3 [Day 1, p. 128, lines 

13-20]. 

64. In December 2002 a federal upper limit price of $0.58 was established for 

fluoxetine 10-mg capsules and $0.60 for 20-mg capsules. Exhibit 13 [FUL Changest to 

Transmittal No. 37]. States also established maximum allowable costs for fluoxetine capsules 

that were at or below the FUL as required by federal law and in compliance with federal 

regulations. 

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65. Before the patent on fluoxetine capsules expired, Par knew that there would be 

competition in the market which would lead to the imposition of federal and state maximum 

prices. But Par knew that there would be little or no competition in the fluoxetine tablet market, 

making price limits on tablets unlikely. 

66. Walgreens reaped the anticipated benefits of the illegal switching. For example, 

for the period July 1, 2001 through December 31, 2004, UFCW paid Dominicks an average per 

unit price of $0.60 for 25,986 units of 20-mg fluoxetine capsules, while it paid Walgreens an 

average per unit price of $1.30 for 45,128 units of Par’s 20-mg fluoxetine tablets.

67. Par gave wholesalers and distributors free products or other incentives to engage 

in a fluoxetine telemarketing program targeting pharmacies on Par’s behalf. Par gave the 

wholesalers scripts to use when making phone calls that contained Par’s key selling point: 

reimbursement on Par’s fluoxetine tablets allowed pharmacies to make huge profits at third-party 

payors’ and the government’s expense. 

68. On October 16, 2001, Nick DiMaio, Par’s executive vice president of sales and 

marketing, sent one of these telemarketing scripts to Amerisource, a drug wholesaler, which 

stated: 

Many third party plans and state agencies are issuing MACs or upper limits on 

reimbursement on fluoxetine. Par’s 20 mg fluoxetine tablets are priced to allow 

you to continue to make acceptable profits when filling prescriptions for 

fluoxetine 20 mg. 

Exhibit 14 [PAR-VA 0109889]. 

69. Par knew that pharmacists were the key to a successful fluoxetine switching 

program. Because pharmacists are licensed by states, Par had to convince pharmacies like 

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Walgreens that their pharmacists would be willing to switch a fluoxetine tablet for a fluoxetine 

or Prozac capsule. Exhibit 25 [Scott Tarriff testimony Oct. 23, 2008] (“Q. On what basis did 

[Par] believe that the [fluoxetine] tablets could compete with the capsules? A. I think the 

company was hopeful that there would be some pharmacist that would substitute a capsule for a 

tablet.”). 

70. Par also relied on “market research” indicating that many pharmacists did not 

understand their legal obligations when switching fluoxetine dosage forms:

· 62% of chain pharmacists, and 68% of independent pharmacists polled in a 

recent survey said that they would be willing to dispense tablets, and did not think 

a physician intervention was necessary. 

· 22% of all pharmacists said that even if the prescription called for capsules, 

they would be willing to dispense tablets without a physician intervention. 

Exhibit 12 [PAR-TX 0010412] (emphasis in original).

71. In furtherance of this goal, Nick DiMaio, Par’s executive vice president of sales 

and marketing, hired Pamela Cieplak, a consulting pharmacist with whom DiMaio had a 

longstanding business relationship, to conduct a 50-state survey of the laws regarding dosage 

form substitution. Exhibit 15 [PAR-TX 0001470-91]. Par intended to use the survey as a 

marketing tool to convince pharmacies and pharmacists to make the switch. 

72. Par new that Cieplak had no legal training, but nevertheless did not have its inside 

or outside counsel review her work. 

73. Cieplak also reviewed and interpreted some of the state pharmacy statutes, but did 

not review state or federal Medicaid laws concerning drug costs and pricing. 

74. On February 18, 2001, Cieplak sent DiMaio an email explaining that Texas and 

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many other states prohibited pharmacists from choosing the dosage form without at least 

notifying the physician: 

In many states, it looks like the states want pharmacists to notify the prescribing 

physician if they dispense a dosage form different from that prescribed (see 

Texas). . . .So it may be that, at least initially, pharmacists would have to notify 

prescribers that they were dispensing a tablet instead of a capsule in those states. 

Exhibit 16 [PAR-VA 0923837] 

75. A draft of the state survey was also attached to Cieplak’s email. In her draft, 

Cieplak correctly cited the provision of Texas law dealing with dosage form substitution: 

The Texas Administrative Code, Chapter 309 states: “With the patient’s consent 

and notification to the practitioner, a pharmacist may dispense a dosage form of a 

drug product different from that prescribed, such as a tablet instead of a capsule. . 

. .” 

Exhibit 17 [0923842]. Cieplak’s summary accurately reflects Texas law — if a patient 

consents and the pharmacist notifies the prescribing physician, the pharmacist can 

dispense a different dosage form. 

76. In the final version of Cieplak’s state survey, however, the quoted Texas law does 

not appear. Instead, Cieplak makes the following inaccurate statement about Texas law and its 

effect on fluoxetine substitution: 

The law is silent on the issue of generic substitution of different dosage forms. It 

is the professional responsibility of the pharmacist to determine the drug product 

to be selected. 

Exhibit 15 [PAR-TX 0001489]. 

77. In addition to misrepresenting state substitution laws, Par misrepresented the 

FDA’s position in order to convince pharmacies to participate in its fluoxetine switching scheme. 

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In a fluoxetine launch presentation created by Par for Caremark, dated June 11, 2001, Par stated: 

The FDA is stating that our 20 mg tablet is safe, effective, and has the same 

bioavailability and therapeutic effect as Prozac 20 mg capsule. 

Exhibit 18 [PAR-TX 0006059] (emphasis in original). 

78. Par’s statement was false. The FDA’s approval letter for Par’s fluoxetine tablets 

compared tablets with tablets and made no mention of capsules: 

We have completed the review of this abbreviated application and have concluded 

that the drug is safe and effective for use as recommended in the submitted 

labeling. Accordingly, the application is approved. The Division of 

Bioequivalence has determined your fluoxetine hydrochloride tablets, 10 mg and 

20 mg to be bioequivalent and, therefore, therapeutically equivalent to the listed 

drug (Prozac Tablets, 10 mg and 20 mg of Eli Lilly and Company). 

Exhibit 19. Several months before Par’s presentation, as noted above, the FDA expressly 

rejected the premise that capsules and tablets were interchangeable. See Exhibit 1 (Letter from 

Janet Woodcock, M.D., FDA Center for Drug Evaluation and Research, December 1, 2000). 

79. In addition to marketing the reimbursement differential on fluoxetine tablets, Par 

offered pharmacies significant financial incentives to participate in the illegal drug switching, 

including free products or stocking rebates to ensure a certain minimum order quantity. Par also 

created what it referred to as “Market Share Conversion Programs,” which it offered to all of its 

major customers, including Walgreens. Par’s objective was to increase the volume of fluoxetine 

tablets dispensed by inducing pharmacies to “convert” prescriptions for fluoxetine or Prozac 

capsules to fluoxetine tablets. The higher the percentage of fluoxetine tablets dispensed versus 

capsules, the greater the additional rebate that Par’s customers would earn. 

80. Par put conditions on the cash payments, requiring customers to agree that they 

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would utilize Par’s fluoxetine as the preferred product for all generic 10-mg, 20-mg, and 40-mg 

Prozac prescriptions. The agreement with Walgreens stated that “Walgreens agrees to utilize 

Par’s 10mg, 20mg and 40mg Fluoxetine as their primary product for filling generic prescriptions 

for brand 10mg caps and tabs, 20mg capsules, and 40mg capsules.” Exhibit 20 [W07270]. This 

meant that whenever a pharmacist received a prescription for fluoxetine or Prozac, Par’s 

fluoxetine tablets would be dispensed regardless of the drug actually prescribed. 

81. As a result of these marketing tactics, Walgreens agreed to buy fluoxetine tablets 

from Par for the purpose of engaging in the dosage form switching scheme. Walgreens stressed 

the importance of the fluoxetine switching initiative to its pharmacists. Tom Lawlor of 

Walgreens stated in an August 3, 2001 email to all pharmacy district managers that “we will be 

cross-referencing the PAR 10 and 20mg tablets to the brand name 10 and 20mg capsules.” 

Exhibit 21 [W 06884] (emphasis in original). Lawlor emphasized that: 

We need to focus on making an immediate conversion from Prozac (Lilly/Dista) 

to fluoxetine on every allowable prescription – refills and new. Please be sure all 

of your staff is aware of this and that they know the procedures to make these 

immediate conversions to the generic. Have a plan in place in your store for all of 

your staff, but especially for the in-window technicians, to make sure your store 

captures every opportunity the very first time one presents itself. 

Exhibit 21 [W 06884]. 

82. Par’s then CEO Scott Tarriff, wrote to Walgreens’ management commending 

them for their participation in the fluoxetine program. Tarriff explained that, “Par elected to 

provide the fluoxetine opportunity to a very select group of customers. Walgreens was selected 

for its progressive, forward thinking approach to pharmacy.” Exhibit 22 [W00109] 

83. Tarriff’s letter went on to state that: 

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In fact, we believe that John Ziebell is perhaps the most creative and visionary 

purchasing executive in the industry. This is evidenced by Walgreen’s 

participation in the ranitidine and fluoxetine programs. Par’s decision to approach 

Walgreen with this opportunity was largely influenced by our belief that John had 

the vision to embrace this concept. 

Id. 

84. By at least August 2001, Walgreens had programmed its pharmaceutical 

distribution system so that all prescriptions for Prozac or generic fluoxetine would be 

automatically filled with fluoxetine tablets. Walgreens made Par’s fluoxetine tablets the only 

form of generic fluoxetine available to its retail customers. 

85. If a new prescription came in for capsules, Walgreens’ pharmacy personnel could 

only fill it with Par’s tablets, requiring its pharmacy staff to fill all Prozac and fluoxetine 

prescriptions with Par’s tablets regardless of what the physician prescribed, in violation of state 

and federal law. Similarly, refills of Prozac and fluoxetine capsules previously filled with 

capsules were filled with tablets. Walgreens did not obtain physician or patient authorization for 

the switches. 

86. In a September 21, 2001 email, George Riedl, Walgreens’ divisional manager for 

pharmacy purchasing boasted that: 

All generic [fluoxetine] sku’s combined produced $8.3 million in gross profit for 

August 2001 with store substitution reaching 85%. The 20 mg tablet alone 

produced $6.4 million in profit making it the #1 Rx profit item in the company. 

Exhibit 21 [W 04618]. 

87. Similarly, while summarizing some of the items discussed during an April 2002 

regional managers meeting, Greg Primuth, a Walgreens district pharmacy supervisor stated: 

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“Are you 90% on generic Prozac? Profit difference w/20 mg tablets is $64. This should be an 

automatic.” Exhibit 23 [W 04453] 

88. The conspiracy that Par and Walgreens created and implemented resulted in 

Walgreens’ transmission of fraudulent claims to Plaintiff and members of the Class, either 

directly or through the PBMs, and receipt by Walgreens of payments far in excess of the MACs 

in place for the drugs actually prescribed. 

89. As Par intended, Walgreens executives echoed the misrepresentation that Par’s 

fluoxetine tablet was AB-rated to Prozac or fluoxetine capsules in numerous emails to its 

pharmacy staff. In an August 3, 2001 email to all pharmacies, Tom Lawlor stated: “Fluoxetine 

tablets, capsules (10 & 20 mg strengths) 40 mg capsules . . . are all AB rated generic equivalents 

to Prozac (Lilly/Dista). . . .These very high profile, high volume AB rated generic equivalent 

represents a significant opportunity for all of us in several areas.” Exhibit 21 [W 06684]. 

90. As with ranitidine, Par helped to cover the costs of Walgreens’ “switch-back” 

from Par’s fluoxetine tablets to capsules in response to the government investigation. 

F. UFCW has been Injured in its Business and Property 

 

91. UFCW has been injured in its business and property as a direct and proximate 

result of Defendants’ unlawful switching schemes. An analysis of UFCW’s prescription records 

for ranitidine and fluoxetine demonstrates that, as compared to other chain pharmacies, UFCW 

paid Walgreens disproportionate amounts for Par’s ranitidine and fluoxetine products. 

92. From July 1, 2001 through December 31, 2004, UFCW paid a total of 

$248,946.93 for its members’ ranitidine and fluoxetine prescriptions. Of the total amount, 41% 

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($101,818.19) was paid to Walgreens and 76% ($188,567.72) was paid to eight large pharmacy 

chains (including Walgreens). The data shows that UFCW was far more likely to pay for the 

more expensive forms of the drugs (i.e., those without MACs) when its members went to 

Walgreens. See Exhibit 26-A-F (summaries of UFCW transactional data). 

UFCW’s Ranitidine Transactions

 (1) Ranitidine Capsules Were More Expensive Than Ranitidine Tablets 

93. As alleged herein, the tablet form of ranitidine was subject to MAC price 

limitations while the capsule form was not. As a result, TPPs like UFCW generally paid a much 

higher price for capsules than for tablets. An analysis of the prices paid by UFCW from July 1, 

2001 through December 31, 2004 bears this out. Graphs 1 and 2 below illustrate the average 

prices UFCW paid for 150-mg and 300-mg ranitidine, in both tablet and capsule form, at the 

major pharmacy chains (1,000 unit minimum). For example, UFCW paid Dominicks for the 

highest volume of 150-mg ranitidine tablets (23,102 units), and those payments averaged 

approximately $0.18 per unit. This can be contrasted with the highest volume of 150-mg 

ranitidine capsules (33,246 units), for which UFCW paid Walgreens approximately $.0.52 per 

unit. See Graph 1 below. Similarly, UFCW paid Dominicks for the highest volume of 300-mg 

ranitidine tablets (1,897 units) and those payments averaged approximately $0.26 per unit. This 

can be contrasted with the highest volume of 300-mg ranitidine capsules (2,897 units), for which 

UFCW paid Walgreens approximately $1.20 per unit. See Graph 2 below. The higher price per 

unit for capsules shows that switching from tablets to capsules caused UFCW to pay greater 

amounts. 

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(2) Walgreens Dispensed the More Expensive Ranitidine Capsules to 

UFCW Members 91.8% of the time, while Other Leading Pharmacy 

Chains Dispensed the More Expensive Capsules Less than 1% of the 

time 

94. UFCW’s transaction records show that, from July 1, 2001 through December 31, 

2004, the less expensive ranitidine tablets were dispensed for almost all of the ranitidine 

transactions at pharmacy chains other than Walgreens and CVS (CVS has also been accused of 

wrongfully switching ranitidine prescriptions1

). As set forth in Table 1 below, Walgreens filled 

91.8% of ranitidine prescriptions with the more expensive capsules and only 8.2% with the less 

expensive tablets (on volume of 39,344 units). In contrast, 99.8% of ranitidine prescriptions at 

six other chain pharmacies were filled with the less expensive tablets, while only 0.2% were 

filled with the more expensive capsules (on volume of 59,694 units). 

TABLE 1

UFCW RANITIDINE TRANSACTIONS 

July 1, 2001 – December 31, 2004 

Pharmacy 150-mg and 300-mg 

capsules and tablets

more expensive 

capsules (units/%)

less expensive tablets 

(units/%)

Walgreens 39,344 units 36,143 (91.8%) 3201 (8.2%)

6 other leading chains* 59,964 units 120 (0.21%) 59,844 (99.79%)

*Dominicks, Osco, Kroger, Walmart, Kmart and Target. CVS excluded from calculations. 

95. As a result, UFCW paid significantly higher amounts to Walgreens than it did to 

the other pharmacy chains. Graphs 3 and 4 below compare UFCW members’ transactions at 

 

1

 On March 18, 2008, the U.S. DOJ announced that CVS entered a $36.7 million settlement with 

the U.S., 23 states and D.C. to settle allegations that it unlawfully switched ranitidine tablet 

prescriptions to capsules. See http://www.justice.gov/opa/pr/2008/March/08_crt_214.html.

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Walgreens and the seven other pharmacy chains on a dollars and units basis. 

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96. As set forth in Exhibit 26-D, Par’s ranitidine capsules account for the bulk of 

UFCW’s members’ ranitidine transactions at Walgreens. 

97. Before Par and Walgreens embarked on the ranitidine switching scheme alleged 

herein, Walgreens dispensed ranitidine tablets manufactured by Mylan Laboratories. See 

Exhibit 6 [W 04526]. In fact, from January 1, 2000 through May 31, 2001, Walgreens filled 

UFCW members’ ranitidine prescriptions with Mylan’s tablets close to 100% of the time 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 36 of 75 PageID #:36
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($17,848.35 for 17,945 tablets2). At all pharmacies during this period, UFCW paid $55,862.46 

for 73,148 units of 150-mg and 300-mg ranitidine, and ranitidine tablets were dispensed 96.8% 

of the time ($54,012.88 for 70,773 tablets). Graph 5 below illustrates the marked shift in the 

form of ranitidine dispensed by Walgreens to UFCW’s members after July 1, 2001, the month 

the switching program was initiated. 

98. Thus, UFCW’s transactional data shows that after July 1, 2001, it was rarely 

billed for the more expensive capsules when its members filled their ranitidine prescriptions at 

the chain pharmacies --- unless they went to Walgreens or CVS, where it was virtually assured. 

This was not because patients with capsule prescriptions coincidentally chose Walgreens, but 

because Walgreens wrongfully filled prescriptions for tablets with capsules, pursuant to the 

 

2

 As noted above, CMS announced on April 6, 2000 that it was setting a federal upper limit for 

ranitidine tablets. 

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35 

scheme alleged herein, so that Defendants could unlawfully profit by evading strict MAC price 

limitations on tablets. 

99. For example, UFCW member “Timothy” visited a Walgreens Drug Store at 300 

E. Main Street, East Peoria, Illinois on August 9, 2002. “Timothy” presented the pharmacist 

with a 150-mg ranitidine prescription that was entered into Walgreens’ Intercom Plus pharmacy 

computer system and automatically recognized as a prescription for 150-mg ranitidine capsules. 

See Exhibit 6 [W 04526]. Walgreens then sent a transmission over interstate wires to UFCW’s 

PBM, Express Scripts, Inc. (“ESI”) in Maryland Heights, Missouri representing that “Timothy” 

had presented a prescription for sixty, 150-mg ranitidine capsules. In response, ESI’s computer 

system, on UFCW’s behalf, sent a transmission over interstate wires to the Walgreens Drug 

Store that: (1) verified “Timothy’s” coverage under UFCW’s prescription benefits program; and 

(2) adjudicated the claim in the amount of $32.72 due from UFCW (since there was no MAC on 

the capsule formulation) and $2.00 due from “Timothy” as a copayment. The $32.72 charge was 

included in UFCW’s payment to ESI. By contrast, the following month, on September 10, 2002, 

“Timothy” had his ranitidine prescription filled at the Kroger Pharmacy on 201 S. Main Street, 

East Peoria, Illinois. Kroger filled the prescription properly with sixty, 150-mg ranitidine tablets 

and UFCW was charged only $9.74 because of MAC limitations. 

UFCW’s Fluoxetine Transactions

 (1) Fluoxetine Tablets Were More Expensive Than Fluoxetine Capsules

100. The data for UFCW members’ Fluoxetine prescriptions tells exactly the same 

story. As alleged herein, the capsule form of fluoxetine was subject to MAC price limitations 

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36 

while the tablet form was not. As a result, TPPs like UFCW generally paid a much higher price 

for tablets than for capsules. An analysis of the prices paid by UFCW during the period July 1, 

2001 through December 31, 2004 bears this out. Graphs 6 and 7 below illustrate the average 

prices UFCW paid for 10-mg and 20-mg ranitidine, in both tablet and capsule form, at the major 

pharmacy chains (1,000 unit minimum). For example, UFCW paid Dominicks for the highest 

volume of 20-mg fluoxetine capsules (25,986 units) and those payments averaged approximately 

$0.60 per unit. This can be contrasted with the highest volume of 20-mg fluoxetine tablets 

(45,128 units), for which UFCW paid Walgreens approximately $1.30 per unit. See Graph 6 

below. Similarly, UFCW paid Dominicks for the highest volume of 10-mg fluoxetine capsules

(3,227 units) and those payments averaged approximately $0.42 per unit. This can be contrasted 

with the highest volume of 10-mg fluoxetine tablets (8,170 units), for which UFCW paid 

Walgreens approximately $0.73 per unit. See Graph 7 below. The higher price per unit for 

tablets shows that switching from capsules to tablets caused UFCW to pay greater amounts. 

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(2) Walgreens Dispensed the More Expensive Fluoxetine Tablets to 

UFCW Members 92.8% of the time, while Other Leading Pharmacy 

Chains Dispensed the More Expensive Tablets Less than 10% of the 

time. 

101. UFCWs transaction records show that, from July 1, 2001 through December 31, 

2004, the less expensive fluoxetine capsules were dispensed for almost all of the fluoxetine 

transactions at pharmacy chains other than Walgreens. As set forth in Table 2 below, Walgreens 

filled 92.8% of fluoxetine prescriptions with the more expensive tablets and only 7.2% with the 

less expensive capsules (on volume of 57,435 units). In contrast, 90.9% of fluoxetine 

prescriptions at seven other chain pharmacies were filled with less expensive capsules, while 

only 9.1% were filled with the more expensive tablets (on volume of 80,163 units). 

TABLE 2

UFCW 10-mg and 20-mg FLUOXETINE TRANSACTIONS 

July 1, 2001 – December 31, 2004 

Pharmacy 10-mg and 20-mg 

capsules and tablets

more expensive tablets less expensive capsules

Walgreens 57,435 units 53,298 (92.8%) 4,137 (7.2%)

7 other leading chains* 80,163 units 7,311 (9.1%) 72,852 (90.9%)

*Dominicks, Osco, Kroger, CVS, Walmart, Kmart and Target. 

102. As a result, UFCW paid significantly higher amounts to Walgreens than it did to 

the other pharmacy chains. Graphs 8 and 9 below compare UFCW members’ transactions at 

Walgreens and the seven other pharmacy chains on a dollars and units basis. 

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103. As set forth in Exhibit 26-F, Par’s fluoxetine tablets account for the bulk of the 

10-mg and 20-mg fluoxetine transactions at Walgreens. 

104. Thus, after the switching program was initiated on July 1, 2001, UFCW was 

rarely billed for the more expensive 10-mg and 20-mg tablets when its members filled their 

fluoxetine prescriptions at the chain pharmacies -- unless they went to Walgreens where it was 

virtually assured. This was not because patients with 10-mg and 20-mg fluoxetine tablet 

prescriptions coincidentally chose Walgreens, but because Walgreens wrongfully filled 

prescriptions for capsules with tablets, pursuant to the scheme alleged herein, so that Defendants 

could unlawfully profit by evading strict MAC price limitations on the capsules. 

105. For example, UFCW member “Sandra” had her fluoxetine prescription filled 

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with 20-mg capsules from August 2001 through January 2004. In her last capsule transaction, on 

January 11, 2004, she received sixty, 20-mg fluoxetine capsules, made a $4.00 copayment and 

UFCW was charged $10.30. The next month, however, “Sandra” switched to a Walgreens 

pharmacy at 5525 W. 159th Street, Oak Forest, Illinois. On February 2, 2004, she filled her 

fluoxetine prescription at Walgreens and received sixty of Par’s 20-mg fluoxetine tablets. 

“Sanda’s” copayment was, again, $4.00, but UFCW was charged $74.44. “Sandra” received 

Par’s capsules from Walgreens for the rest of 2004, and UFCW paid the higher prices 

unrestrained by MAC limitations. 

THE DISCOVERY RULE AND TOLLING OF THE STATUTES OF LIMITATIONS

106. Plaintiff and the Class, in the exercise of reasonable diligence, could not 

determine that they had been injured by paying for higher priced products that were not 

prescribed by physicians until, at the earliest, June 4, 2008, when the United States Department 

of Justice announced Walgreens’ agreement to reimburse governmental entities for Medicaid 

claims. Even then, very few details were released about the alleged schemes. Par’s involvement 

in the ranitidine and fluoxetine schemes did not become public until July, 2011, when the qui 

tam case against Par was unsealed. United States of America ex rel. Bernard Lisitza v. Par 

Pharmaceutical Companies, Inc., et al., No. 06-c-6131 (N.D. Ill.). The amended complaint in 

that case, made public for the first time on July 19, 2011, included internal documents 

evidencing Walgreens’ and Par’s involvement in the schemes. 

107. Plaintiff could not have discovered the allegations underlying the government’s 

investigations, as all relevant pleadings in United States of America ex rel. Bernard Lisitza v. 

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Walgreen Co., No. 03-C-00744 (N.D. Ill.) and United States of America ex rel. Bernard Lisitza 

v. Par Pharmaceutical Companies, Inc., et al., No. 06-c-6131 (N.D. Ill.) were filed under seal. 

The complaint against Walgreens was not unsealed until June 4, 2008, see May 29, 2008 Order 

[Docket Entry No. 36], and the rest of the court file remains under seal. The complaint against 

Par was not unsealed until July 19, 2011, see July 8, 2011 order [Docket Entry No. 34], and most 

of the court file remains under seal. The federal False Claims Act (“FCA”) requires that, in 

cases filed by qui tam relators, “[t]he complaint shall be filed in camera, [and] shall remain 

under seal for at least 60 days,” during which the government may elect to intervene. 31 U.S.C. 

§ 3730(b)(2). Furthermore, “[t]he Government may, for good cause shown, move the court for 

extensions of the time during which the complaint remains under seal.” Id. at 3730(b)(3). 

108. Even now, much of the evidence underlying the Government’s investigation of 

Walgreens remains off-limits to Plaintiff, as the FCA also exempts from disclosure under the 

Freedom of Information Act “[a]ny documentary material, answers to written interrogatories, or 

oral testimony provided under any civil investigative demand” issued by the Government prior to 

its election to intervene. 31 U.S.C. § 3733(k). 

CLASS ALLEGATIONS

109. Plaintiff brings this class action pursuant to Rule 23(b)(3) of the Federal Rules of 

Civil Procedure on behalf of a class defined as follows: 

All third-party payors (including insurance companies, employers and union 

health and welfare funds) in the United States and its territories that, during the 

period from July 1, 2001 through 2006 (the “Class Period”), paid and/or 

reimbursed for all or part of prescriptions filled at Walgreens with: 

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 (a) 150-mg and 300-mg ranitidine capsules; and/or 

 (b) 10-mg and 20-mg fluoxetine tablets.

Excluded from the Class are Defendants and their respective subsidiaries and affiliates, and all 

governmental entities.

110. The members of the Class are so numerous that joinder of all members is 

impracticable. Walgreens has thousands of retail pharmacies and, at a minimum, hundreds of 

thousands of prescriptions for the drugs at issue were dispensed by Walgreens during the Class 

Period and were paid for by thousands of TPPs across the country. 

111. Defendants’ unlawful conduct and trade practices have targeted and affected all 

members of the Class in a similar manner, i.e., they overpaid for ranitidine and fluoxetine 

because the prescriptions of members, employees and insureds were unlawfully switched from 

the less-expensive dosage forms to the more expensive dosage forms. Among the questions of 

law and fact common to the Class are: 

 (a) whether Walgreens, pursuant to an agreement with Par, adopted a corporate 

policy of filling prescriptions with a different dosage form than the one indicated on the 

prescription without obtaining the prescribing physician=s authorization; 

(b) whether Walgreens= pharmaceutical distribution system was set up to make it 

difficult or impossible to fill a prescription for ranitidine and fluoxetine dosage forms that 

were subject to MACs and to instead fill said prescriptions with dosage forms 

manufactured by Par that were not subject to MACs; 

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(c) whether Defendants defrauded and conspired to defraud Plaintiff and the Class by 

using the U.S. mail and interstate wire transmissions to: 

i) unlawfully profit from the sale of ranitidine capsules by 

misrepresenting that prescriptions written for low-cost ranitidine tablets had been 

written for high-priced ranitidine capsules, filling said prescriptions with 

ranitidine capsules, and charging purchasers and payors the higher prices for the 

capsules; and 

ii) unlawfully profit from the sale of fluoxetine tablets by misrepresenting 

that prescriptions written for low-cost fluoxetine capsules had been written for 

high-priced fluoxetine tablets, filling said prescriptions with fluoxetine tablets, 

and charging purchasers and payors the higher prices for the tablets. 

(d) the amount of the overcharges or amounts paid or reimbursed by members of the 

Class over and above the amounts they would have paid or reimbursed but for 

Defendants’ illegal acts as alleged herein; and 

(e) whether Defendants violated 18 U.S.C. §§ 1962(c) and (d). 

112. Plaintiff=s claims are typical of those of the Class they represent because Plaintiff 

and all of the Class members were injured in the same manner by Defendants’ unlawful acts and 

practices, i.e., they paid for prescriptions wrongfully filled with dosage forms that were not 

subject to MACs. 

113. Plaintiff will fully and adequately protect the interests of all members of the 

Class. Plaintiff has retained counsel who are experienced in pharmaceutical class action 

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litigation. Plaintiff has no interests which are adverse to, or in conflict with, other members of 

the Class. 

114. The questions of law and fact common to the members of the Class predominate 

over any questions which may affect only individual members. 

115. A class action is superior to all other available methods for the fair and efficient 

adjudication of this controversy. Plaintiff knows of no difficulty likely to be encountered in the 

management of this action that would preclude its maintenance as a class action. 

COUNT I

VIOLATION OF 18 U.S.C. § 1962(c) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Walgreens) 

116. Plaintiff realleges and incorporates by reference all prior paragraphs of this 

Complaint as if fully set forth herein. 

117. This action is brought under 18 U.S.C. § 1964(c) for violation of 18 U.S.C. § 

1962(c). 

118. At all times material to this Complaint, Walgreens was a “person” within the 

meaning of 18 U.S.C. §§ 1961(3) and 1962(c). 

119. As more fully set forth below, Walgreens conducted, or participated in the 

conduct of the affairs of an association-in-fact enterprise, through a pattern of racketeering 

activity, specifically acts of mail and wire fraud. 

The Walgreens/Par/Hrp Enterprise

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120. Walgreens and Par referred to their relationship as the “Walgreens/Par/Hrp” (i.e., 

health resource partnership). Exhibit 7 [W00066]. For purposes of this claim, the 

“Walgreens/Par/Hrp Enterprise” was an ongoing and continuing business organization that 

operated from approximately 2001 through 2006 and consisted of Walgreens, Par and senior 

management personnel from both companies, including Nick DiMaio (Par’s top marketing 

executive), Scott Tarriff (Par’s President and CEO), Julie Trendowicz (Par’s vice president of 

sales and marketing), Bill Groth (Walgreens’ divisional manager for pharmacy purchasing), Tom 

Lawlor (Walgreens’ director of pharmacy marketing), John Ziebell (Walgreens’ chief purchaser 

of generic drugs) and George Riedl (Walgreen’s Senior Vice-President of Drug Store Marketing 

Division). The Walgreens/Par/Hrp Enterprise constituted an association-in-fact “enterprise” as 

the term is defined in 18 U.S.C. §§ 1961(4) and 1962(c). 

121. The companies and individuals that constitute the Walgreens/Par/Hrp Enterprise 

were associated for the common purpose of: (1) unlawfully profiting from the sale of ranitidine 

capsules by misrepresenting that prescriptions written for low-cost ranitidine tablets had been 

written for high-priced ranitidine capsules, filling said prescriptions with ranitidine capsules, and 

charging purchasers and third-party payors the higher prices for the capsules; and (2) unlawfully 

profiting from the sale of fluoxetine tablets by misrepresenting that prescriptions written for lowcost fluoxetine capsules had been written for high-priced fluoxetine tablets, filling said 

prescriptions with fluoxetine tablets, and charging purchasers and third-party payors the higher 

prices for the tablets. 

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122. Par initiated the Walgreens/Par/Hrp Enterprise because there was little or no 

commercial demand for its FDA-approved generic ranitidine capsules and fluoxetine tablets. 

This was because physicians had a strong preference for prescribing ranitidine tablets and 

fluoxetine capsules, respectively, and that preference resulted in market competition by several 

manufacturers, highly competitive pricing and corresponding restrictions on the amounts that 

governmental programs and commercial health benefit providers would reimburse for these 

drugs, i.e., FULs and MACs. Because there was little or no demand or competition for generic 

ranitidine capsules and generic fluoxetine tablets, on the other hand, prices and reimbursements 

were not restrained by FULs or MACs. As Bill Groth (Walgreens’ Divisional Manager of 

Pharmacy Purchasing) explained with respect to ranitidine in a May 15, 2001 email: “[S]ince 

these items [i.e., 150mg and 300mg tablets] are highly competitive 3rd party payors and the 

government have created MAC (maximum allowable cost) pricing which limits our 

reimbursement.....By switching to a capsule dosage form we have discovered that there are not 

currently constraints on MAC ....” Exhibit 4 [W11022] (ellipses in original). 

123. Walgreens joined the Walgreens/Par/Hrp Enterprise so that it could garner 

unlawful profits on sales of ranitidine capsules and fluoxetine tablets that were not subject to 

FUL or MAC reimbursement limitations. Competitive pricing for ranitidine tablets and 

fluoxetine capsules (i.e., FULs and MACs) resulted in much smaller profit margins when 

Walgreens filled these prescriptions. For example, Groth’s May 15, 2001 email relative to 

ranitidine concluded that “[a]t a 50% conversion rate increased GP [gross profit] dollars could 

achieve approximately $1.66MM per month...” Id. 

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124. Par could not make significant profits on its generic ranitidine capsules and 

generic fluoxetine tablets because there was little or no commercial demand for those drug 

forms. For Par to convince physicians to alter their prescribing habits, it would have had to 

engage in a marketing effort and hire marketing personnel. These are steps rarely taken by 

generic pharmaceutical manufacturers because their products are seldom patent protected, and a 

successful marketing effort would likely result in several generic manufacturers entering the 

market and “free riding” on the marketing effort, thereby limiting any significant profit potential. 

In an Alphapharm email dated May 9, 2000, for example, it was noted that “PAR certainly does 

not have the marketing muscle to establish a new market for the [fluoxetine] tablet .....” Exhibit 

24 [A 025902]. 

125. Because it was economically impracticable for Par and Walgreens to realize the 

higher profits they sought on ranitidine capsule and fluoxetine tablet sales through legitimate 

means, Par, Walgreens and key management personnel from both companies, combined to form 

the association-in-fact Walgreens/Par/Hrp Enterprise, through which they unlawfully forced

sales of high-priced ranitidine capsules and fluoxetine tablets. 

126. Par’s role in the Walgreens/Par/Hrp Enterprise was to supply the ranitidine 

capsules and fluoxetine tablets to Walgreens. Walgreens’ role was to use its national computer 

system (Intercom Plus) and distribution facilities to fill prescriptions written for ranitidine tablets 

with ranitidine capsules by: (i) misrepresenting to its pharmacists (among others) that the 

ranitidine capsules were AB-rated to tablets; and (ii) misrepresenting to PBMs and health 

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benefits providers (among others) that ranitidine prescriptions had been written for capsules 

when the overwhelming majority were actually written for tablets. 

127. Walgreens also used its national computer system (Intercom Plus) and distribution 

facilities to fill prescriptions written for fluoxetine capsules with fluoxetine tablets by: (i) 

misrepresenting to its pharmacists (among others) that the fluoxetine tablets were AB-rated to 

capsules; and (ii) misrepresenting to PBMs and health benefits providers (among others) that 

fluoxetine prescriptions had been written for tablets when the overwhelming majority were 

actually written for capsules. 

Walgreens Conducted the Affairs of the Enterprise

128. Walgreens conducted and/or participated in the conduct of the affairs of the 

Walgreens/Par/Hrp Enterprise. Specifically, Walgreens operated and managed the business of 

the Enterprise through high level personnel, including Bill Groth, Tom Lawlor, John Ziebell and 

George Riedl, who caused Walgreens to engage in the unlawful prescription switching programs. 

Par targeted Walgreens as a partner in the prescription switching schemes because Walgreens 

had a nationwide computer system that could automatically implement unlawful switching of 

prescriptions, regardless of what the physicians actually prescribed. Walgreens did not have any 

system in place to obtain physician or patient authorization for the drug switching, or even a 

system to notify the physician or patient that the prescribed drug had been switched. Walgreens’ 

legitimate business affairs included filling physicians’ prescriptions as they were written or, 

when authorized, substituting generic versions of branded drugs. When unlawfully switching 

ranitidine and fluoxetine prescriptions, however, Walgreens was participating in the operation 

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and management of the Walgreens/Par/Hrp Enterprise rather than its own legitimate affairs. 

Walgreens exerted control over the Walgreens/Par/Hrp Enterprise and, in violation of Section 

1962(c), Walgreens conducted or participated in the conduct of the affairs of the enterprise, 

directly or indirectly, as described herein. 

Walgreens’ Use of the U.S. Mails and Interstate Wire Facilities

129. Walgreens’ illegal conduct and wrongful practices were carried out by an array of 

employees, working across state boundaries, who necessarily relied upon frequent transfers of 

documents and information, products and funds by U.S. mail and interstate wire facilities. 

130. Walgreens’ participation in the affairs of the Walgreens/Par/Hrp Enterprise was 

orchestrated out of Walgreens’ corporate headquarters in Deerfield, Illinois and necessarily 

required that management personnel in Deerfield communicate directly and frequently by the 

U.S. mails and interstate wire facilities with Walgreens’ pharmacies and facilities in forty-nine 

states, the District of Columbia and Puerto Rico, as well as Par personnel in New Jersey and 

New York. 

131. Many of the precise dates of Walgreens’ uses of the U.S. mails and interstate wire 

facilities (and corresponding acts of mail and wire fraud) have been hidden and cannot be alleged 

without access to Defendants’ books and records. Indeed, an essential part of the successful 

operation of the prescription switching schemes alleged herein depended upon secrecy, and 

Walgreens took deliberate steps to conceal its wrongdoing, including discontinuing its unlawful 

switching when governmental authorities became suspicious. Nevertheless, Plaintiff can 

describe specific occasions on which RICO predicate acts of mail fraud and wire fraud occurred, 

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and can explain how those acts were in furtherance of the prescription switching schemes, as 

described below. 

132. The attached exhibits include several concrete examples of foreseeable uses of 

interstate wire communications and/or the U.S. mail in furtherance of Defendants’ fraudulent 

schemes. For example: 

Date/ 

Bates#/ 

Exhibit# 

Method of 

Communication 

From 

(name/company/ 

location) 

To 

(name/company 

/location) 

Nature of 

communication in 

furtherance of 

schemes 

7/12/01 

W04526 

Ex. 6 

email Tom Lawlor 

Walgreens 

Deerfield, IL 

All Walgreens 

Pharmacies 

Nationwide 

cc. All Walgreens 

District Mangers 

Nationwide 

message sent to all 

Walgreens stores 

regarding ranitidine 

capsule substitution 

program and falsely 

representing that 

capsules are ABrated to tablets 

7/30/01 

W07270 

Ex. 20 

facsimile John Ziebell 

Walgreens 

Deerfield, IL 

Julie Trendowicz 

Par 

Spring Valley, NY 

agreement for 

Walgreens to 

dispense Par’s 10-

mg and 20-mg 

fluoxetine tablets as 

primary product for 

filling prescriptions 

for 10-mg capsules 

and tablets and 20mg 

capsules 

8/3/01 

W06884 

Ex. 21 

email Tom Lawlor 

Walgreens 

Deerfield, IL 

All Walgreens 

Pharmacies 

Nationwide 

All Walgreens 

District Mangers 

Nationwide 

OpsVPs 

Walgreens 

informing all of 

switching program 

and stating “we will 

be cross-referencing

the PAR 10 and 

20mg tablets to the 

brand name 10 and 

20mg capsules.” 

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Deerfield, IL 

Bcc. Jim Ash 

Walgreens 

Deerfield, IL 

8/23/01 

W00109 

Ex. 22 

U.S. Mail, 

fax, or email 

Scott Tarriff 

Par 

Spring Valley, NY 

George Riedl 

Walgreens 

Deerfield, IL 

Cc. Bill Grath (sic 

Groth) 

J. Karlin 

J. Rein 

J. Zeibell 

Walgreens 

Deerfield, IL 

thanking Walgreens 

for participation in 

“ranitidine and 

fluoxetine programs” 

and assuring 

Walgreens that they 

“will find additional 

programs to 

collaborate on.” 

133. In response to directives from senior management, including Bill Groth, Tom 

Lawlor, John Ziebell and George Riedl, Walgreens configured its Intercom Plus pharmacy 

computer system so that communications over interstate wire facilities caused Walgreens 

pharmacists throughout the country to fill prescriptions written for Zantac or generic ranitidine 

tablets with Par’s ranitidine capsules, and to fill prescriptions written for Prozac or generic 

fluoxetine capsules with Par’s fluoxetine tablets. 

134. In 2001, for example, UFCW’s PBM was National Prescription Administrators, 

Inc. (“NPA”), which was based in East Hanover, New Jersey. When a UFCW member 

purchased a prescription at a pharmacy, such as Walgreens, the pharmacist transmitted the claim 

through interstate wire transmissions to NPA in East Hanover, New Jersey, which provided real 

time verification of eligibility for participation in UFCW’s prescription benefit plan, identified 

the amount of copayment due, and adjudicated the claim on behalf of UFCW. Each of UFCW’s 

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PBMs utilized technology for on-line, real time claims processing and adjudication at the pointof-sale.3

 Thus, every time Walgreens submitted a claim for reimbursement to UFCW’s PBM, 

Walgreens represented that the amount claimed was for the drug actually prescribed by the 

covered individual’s physician. Because electronic claims are submitted and adjudicated 

instantaneously, Walgreens made these representations and submitted claims to the PBMs over 

interstate wire facilities on a daily basis. 

135. Based upon Walgreens’ representations, UFCW’s PBM adjudicated the claims 

and UFCW immediately became obligated to pay those claims. UFCW’s PBM sent UFCW a 

breakdown of what it owed for prescriptions purchased at Walgreens, and UFCW wired those 

funds to its PBM as its payment agent for reimbursement to Walgreens. Including UFCW’s 

transactions, Walgreens received money -- the wrongful proceeds of the prescription switching 

schemes -- sent by U.S. mails and/or interstate wire facilities on thousands of occasions. 

Walgreens’ Pattern of Racketeering Activity

136. Walgreens conducted and participated in the affairs of the Walgreens/Par/Hrp 

Enterprise through a pattern of racketeering activity, including the above-described acts which 

are indictable under 18 U.S.C. § 1341, relating to mail fraud, and 18 U.S.C. § 1343, relating to 

wire fraud. On thousands of separate occasions during the five year class period, Walgreens 

 

3

 In 2002, NPA was purchased by ESI, which continued as UFCW’s PBM through December 1, 

2003. ESI is a Delaware corporation with its principal place of business in Maryland Heights, 

Missouri. From January 1, 2004 through the end of the Class Period (December 31, 2006), 

UFCW’s PBM was National Medical Health Card Systems, Inc. (“NMHC”), which was 

headquartered in Port Washington, New York, with service centers in Latham, New York and 

Little Rock, Arkansas. 

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used the U.S. mails or interstate wire facilities in furtherance of the ranitidine and fluoxetine 

schemes. Each of these fraudulent mailings and interstate wire transmissions constitute 

“racketeering activity” within the meaning of 18 U.S.C. § 1961(1)(B). The last act of 

racketeering activity occurred within ten years of prior acts of racketeering activity. 

Collectively, these violations constitute a “pattern of racketeering activity” within the meaning of 

18 U.S.C. § 1961(5), in which Walgreens intended to defraud Plaintiff, members of the Class and 

other intended victims of the schemes. 

137. The fraudulent and unlawful prescription switching schemes misrepresented that 

prescriptions written for low-cost dosage forms of ranitidine and fluoxetine had been written for 

high-priced dosage forms manufactured by Par so that Walgreens and Par could reap massive 

unlawful profits. The schemes were calculated and intentionally crafted to ensure that Plaintiff 

and members of the Class would make overpayments for these prescriptions. In designing and 

implementing the schemes, Walgreens was at all times cognizant of the fact that Plaintiff, 

members of the Class and their agents (i.e., PBMs) would rely on Walgreens’ integrity and 

observance of the contracts and laws governing the filling of prescriptions for controlled 

substances. By intentionally and systematically misrepresenting that prescriptions were written 

for high-priced dosage forms (when they were not) and by failing to disclose these practices to 

patients, physicians, health benefit providers (including government programs) and PBMs, 

Walgreens engaged in a fraudulent and unlawful course of conduct constituting a pattern of 

racketeering activity. 

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138. Walgreens’ racketeering activities amounted to a common course of conduct, with 

similar pattern and purpose, intended to deceive Plaintiff and members of the Class. Each 

separate use of the U.S. mails or interstate wire facilities employed by Walgreens was related, 

had similar intended purposes, involved similar participants and methods of execution, and had 

the same results affecting the same victims, including Plaintiffs and members of the Class. 

Walgreens engaged in the pattern of racketeering activity for the purpose of conducting the 

business affairs of the Walgreens/Par/Hrp Enterprise. 

Walgreens’ Motive

139. Walgreens’ motive for participating in the affairs of the Walgreens/Par/Hrp 

Enterprise was the prospect of reaping many millions of dollars in additional annual profits by 

dispensing and billing for high-priced Par products in place of the low-cost drugs actually 

prescribed by physicians. For example, Par’s presentation to Walgreens showed how 

Walgreens’ participation in the schemes could result in total annual profits on ranitidine of 

$80,400,656 (for 150mg capsules) as compared to $5,143,588 (for 150mg tablets). Exhibit 2

[Par-Tx 0000163]. 

Damages Caused by the Prescription Switching Schemes

140. Walgreens’ violation of federal law and its pattern of racketeering activity have 

directly and proximately caused Plaintiff and members of the Class to be injured in their business 

and property because Plaintiff and members of the Class have paid many millions of dollars for 

high-priced ranitidine capsules and fluoxetine tablets that were not prescribed by physicians. 

Plaintiff and members of the Class made the payments based on, and in reliance on, Walgreens’ 

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representations that ranitidine capsules and fluoxetine tablets had been prescribed to the patients 

in question. 

 WHEREFORE, Plaintiff requests judgment in its and the Class’s favor, and against 

Walgreens, and for the following relief: 

(a) Compensatory damages in the amount to be determined at trial; 

(b) Treble the amount of compensatory damages; 

(c) Prejudgment interest along with the costs of bringing suit, including 

reasonable attorneys’ fees; and 

(d) Such other and further relief as the Court deems just and equitable. 

COUNT II

VIOLATION OF 18 U.S.C. § 1962(c) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Par) 

141. Plaintiff realleges and incorporates by reference all prior paragraphs of this 

Complaint as if fully set forth herein. 

142. This action is brought under 18 U.S.C. § 1964(c) for violation of 18 U.S.C. § 

1962(c). 

143. At all times material to this Complaint, Par was a “person” within the meaning of 

18 U.S.C. §§ 1961(3) and 1962(c). 

144. As more fully set forth below, Par conducted, or participated in the conduct of the 

affairs of an association-in-fact enterprise, through a pattern of racketeering activity, specifically 

acts of mail and wire fraud. 

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The Walgreens/Par/Hrp Enterprise

145. Walgreens and Par referred to their relationship as the “Walgreens/Par/Hrp” (i.e., 

health resource partnership). Exhibit 7 [W00066]. For purposes of this claim, the 

“Walgreens/Par/Hrp Enterprise” was an ongoing and continuing business organization that 

operated from approximately 2001 through 2006 and consisted of Walgreens, Par and senior 

management personnel from both companies, including Nick DiMaio (Par’s top marketing 

executive), Scott Tarriff (Par’s President and CEO), Julie Trendowicz (Par’s vice president of 

sales and marketing), Bill Groth (Walgreens’ divisional manager for pharmacy purchasing), Tom 

Lawlor (Walgreens’ director of pharmacy marketing), John Ziebell (Walgreens’ chief purchaser 

of generic drugs), and George Riedl (Walgreen’s Senior Vice-President of Drug Store Marketing 

Division). The Walgreens/Par/Hrp Enterprise constituted an association-in-fact “enterprise” as 

the term is defined in 18 U.S.C. §§ 1961(4) and 1962(c). The companies and individuals that 

constitute the Walgreens/Par/Hrp Enterprise were associated for the common purpose of: (1) 

unlawfully profiting from the sale of ranitidine capsules by misrepresenting that prescriptions 

written for low-cost ranitidine tablets had been written for high-priced ranitidine capsules, filling 

said prescriptions with ranitidine capsules, and charging purchasers and third-party payors the 

higher prices for the capsules; and (2) unlawfully profiting from the sale of fluoxetine tablets by 

misrepresenting that prescriptions written for low-cost fluoxetine capsules had been written for 

high-priced fluoxetine tablets, filling said prescriptions with fluoxetine tablets, and charging 

purchasers and third-party payors the higher prices for the tablets. 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 60 of 75 PageID #:60
58 

146. Par initiated the Walgreens/Par/Hrp Enterprise because there was little or no 

commercial demand for its FDA-approved generic ranitidine capsules and fluoxetine tablets. 

This was because physicians had a strong preference for prescribing ranitidine tablets and 

fluoxetine capsules, respectively, and that preference resulted in market competition by several 

manufacturers, highly competitive pricing and corresponding restrictions on the amounts that 

governmental programs and commercial health benefit providers would reimburse for these 

drugs, i.e., FULs and MACs. Because there was little or no demand or competition for generic 

ranitidine capsules and generic fluoxetine tablets, on the other hand, prices and reimbursements 

were not restrained by FULs or MACs. As Bill Groth (Walgreens’ Divisional Manager of 

Pharmacy Purchasing) explained with respect to ranitidine in a May 15, 2001 email: “[S]ince 

these items [i.e., 150mg and 300mg tablets] are highly competitive 3rd party payors and the 

government have created MAC (maximum allowable cost) pricing which limits our 

reimbursement.....By switching to a capsule dosage form we have discovered that there are not 

currently constraints on MAC ....” Exhibit 4 [W11022] (ellipses in original). 

147. Walgreens joined the Walgreens/Par/Hrp Enterprise so that it could garner 

unlawful profits on sales of ranitidine capsules and fluoxetine tablets that were not subject to 

FUL or MAC reimbursement limitations. Competitive pricing for ranitidine tablets and 

fluoxetine capsules (i.e., FULs and MACs) resulted in much smaller profit margins when 

Walgreens filled these prescriptions. For example, Groth’s May 15, 2001 email relative to 

ranitidine concluded that “[a]t a 50% conversion rate increased GP [gross profit] dollars could 

achieve approximately $1.66MM per month...” Id. 

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59 

148. Par could not make significant profits on its generic ranitidine capsules and 

generic fluoxetine tablets because there was little or no commercial demand for those drug 

forms. In order for Par to convince physicians to alter their prescribing habits, it would have had 

to engage in a marketing effort and hire marketing personnel. These are steps rarely taken by 

generic pharmaceutical manufacturers because their products are seldom patent protected, and a 

successful marketing effort would likely result in several generic manufacturers entering the 

market and “free riding” on the marketing effort, thereby limiting any significant profit potential. 

In an Alphapharm email dated May 9, 2000, for example, it was noted that “PAR certainly does 

not have the marketing muscle to establish a new market for the [fluoxetine] tablet .....” Exhibit 

24 [A 025902]. 

149. Because it was economically impracticable for Par and Walgreens to realize the 

higher profits they sought on ranitidine capsule and fluoxetine tablet sales through legitimate 

means, Par, Walgreens and key management personnel from both companies, combined to form 

the association-in-fact Walgreens/Par/Hrp Enterprise, through which they unlawfully forced

sales of high-priced ranitidine capsules and fluoxetine tablets. 

150. Par’s role in the Walgreens/Par/Hrp Enterprise was to supply the ranitidine 

capsules and fluoxetine tablets to Walgreens. Walgreens’ role was to use its national computer 

system (Intercom Plus) and distribution facilities to fill prescriptions written for ranitidine tablets 

with ranitidine capsules by: (i) misrepresenting to its pharmacists (among others) that the 

ranitidine capsules were AB-rated to tablets; and (ii) misrepresenting to PBMs and health 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 62 of 75 PageID #:62
60 

benefits providers (among others) that ranitidine prescriptions had been written for capsules 

when the overwhelming majority were actually written for tablets. 

151. Walgreens also used its national computer system (Intercom Plus) and distribution 

facilities to fill prescriptions written for fluoxetine capsules with fluoxetine tablets by: (i) 

misrepresenting to its pharmacists (among others) that the fluoxetine tablets were AB-rated to 

capsules; and (ii) misrepresenting to PBMs and health benefits providers (among others) that 

fluoxetine prescriptions had been written for tablets when the overwhelming majority were 

actually written for capsules. 

Par Conducted the Affairs of the Enterprise

152. Par conducted and/or participated in the conduct of the affairs of the 

Walgreens/Par/Hrp Enterprise. Specifically, Par operated and managed the business of the 

Enterprise through high level personnel, including Nick DiMaio, Scott Tarriff and Julie 

Trendowicz, who proposed the schemes to Walgreens and enticed Walgreens’ participation by 

demonstrating the much higher profits available under the switching schemes. Par targeted 

Walgreens as a partner in the prescription switching schemes because Walgreens had a 

nationwide computer system that could automatically implement unlawful switching of 

prescriptions, regardless of what the physicians actually prescribed. Walgreens did not have any 

system in place to obtain physician or patient authorization for the drug switching, or even a 

system to notify the physician or patient that the prescribed drug had been switched. Par’s 

legitimate business affairs included developing, manufacturing, marketing and distributing 

generic pharmaceutical products. By combining with Walgreens to engage in the unlawful 

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61 

switching of ranitidine and fluoxetine prescriptions, however, Par was participating in the 

operation and management of the Walgreens/Par/Hrp Enterprise rather than its own legitimate 

affairs. Par exerted control over the Walgreens/Par/Hrp Enterprise and, in violation of Section 

1962(c), Walgreens conducted or participated in the conduct of the affairs of the enterprise, 

directly or indirectly, as described herein. 

U.S. Mails and Interstate Wire Facilities

153. Par’s illegal conduct and wrongful practices were carried out by an array of 

employees, working across state boundaries, who necessarily relied upon frequent transfers of 

documents and information, products and funds by U.S. mail and interstate wire facilities. 

154. Par’s participation in the affairs of the Walgreens/Par/Hrp Enterprise was 

orchestrated out of Par’s corporate headquarters in Woodcliff Lake, New Jersey and its facilities 

in Spring Valley, New York, and necessarily required that management personnel communicate 

directly and frequently by the U.S. mails and interstate wire facilities with Walgreens’ 

headquarters in Deerfield, Illinois. Many of the precise dates of Par’s uses of the U.S. mails and 

interstate wire facilities (and corresponding acts of mail and wire fraud) have been hidden and 

cannot be alleged without access to Defendants’ books and records. Indeed, an essential part of 

the successful operation of the prescription switching schemes alleged herein depended upon 

secrecy, and Par took deliberate steps to conceal its wrongdoing, including compensating 

Walgreens for anticipated lost profits under the schemes when Walgreens refrained from some of 

the unlawful switching in response to governmental investigations into the practices. 

Nevertheless, Plaintiff can describe specific occasions on which RICO predicate acts of mail 

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62 

fraud and wire fraud occurred, and explain how those acts were in furtherance of the prescription 

switching schemes, as described below. 

155. The attached exhibits include several concrete examples of foreseeable uses of 

interstate wire communications and/or the U.S. mail in furtherance of Defendants’ fraudulent 

schemes. For example: 

Date/ 

Bates#/ 

Exhibit# 

Method of 

Communication 

From 

(name/company/ 

location) 

To 

(name/company 

/location) 

Nature of 

communication in 

furtherance of 

schemes 

7/12/01 

W04526 

Ex. 6 

Email Tom Lawlor 

Walgreens 

Deerfield, IL 

All Walgreens 

Pharmacies 

Nationwide 

cc. All Walgreens 

District Mangers 

Nationwide 

message sent to all 

Walgreens stores 

regarding ranitidine 

capsule substitution 

program and falsely 

representing that 

capsules are ABrated to tablets 

10/16/01 

PARVA 

0109889 

Ex. 14 

Email Nick DiMaio 

Par 

Woodcliff Lake, NJ 

Sam Vossenberg 

Amerisource 

Valley Forge, PA 

Lyn Pickford 

Par 

Woodcliff, NJ 

explaining how 

TPPs are issuing 

MACs on fluoxetine 

and that Par’s 20mg 

tablets are price to 

allow “acceptable 

profits” when filling 

20mg prescriptions 

2/18/01 

PARVA 

0923837 

Exs. 16 -

17. 

Email Pamela Cieplak 

Cieplak Research 

Inc. 

Fairfax, Virginia 

Nick DiMaio 

Par 

Woodcliff Lake, NJ 

communication 

regarding state laws 

and regulations 

regarding 

substituting different 

dosage forms and 

attaching draft 

survey with accurate 

information 

regarding states such 

as Texas 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 65 of 75 PageID #:65
63 

7/30/01 

W07270 

Ex. 20 

Facsimile John Ziebell 

Walgreens 

Deerfield, IL 

Julie Trendowicz 

Par 

Spring Valley, NY 

agreement for 

Walgreens to use 

Par’s 10-mg and 20-

mg fluoxetine tablets 

as primary product 

for filling 

prescriptions for 10-

mg capsules and 

tablets and 20mg 

capsules. 

8/3/01 

W06884 

Ex. 21 

Email Tom Lawlor 

Walgreens 

Deerfield, IL 

All Walgreens 

Pharmacies 

Nationwide 

All Walgreens 

District Mangers 

Nationwide 

OpsVPs 

Walgreens 

Deerfield, Il 

Bcc. Jim Ash 

Walgreens 

Deerfield, IL 

informing all of 

switching program 

and stating “we will 

be cross-referencing

the PAR 10 and 

20mg tablets to the 

brand name 10 and 

20mg capsules.” 

8/23/01 

W00109 

Ex. 22 

Mail, fax, or 

email 

Scott Tarriff 

Par 

Spring Valley, NY 

George Riedl 

Walgreens 

Deerfield, IL 

Cc. Bill Grath (sic 

Groth) 

J. Karlin 

J. Rein 

J. Zeibell 

Walgreens 

Deerfield, IL 

thanking Walgreens 

for participation in 

“ranitidine and 

fluoxetine programs” 

and assuring 

Walgreens that they 

“will find additional 

programs to 

collaborate on.” 

156. In furtherance of the schemes, Walgreens configured its Intercom Plus pharmacy 

computer system so that communications over interstate wire facilities caused Walgreens 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 66 of 75 PageID #:66
64 

pharmacists throughout the country to fill prescriptions written for Zantac or generic ranitidine 

tablets with Par’s ranitidine capsules, and to fill prescriptions written for Prozac or generic 

fluoxetine capsules with Par’s fluoxetine tablets. See, e.g., ¶ 46. 

157. As a result of Par’s agreements to supply Walgreens with ranitidine capsules and 

fluoxetine tablets to dispense pursuant to the schemes, Walgreens paid Par for those products 

utilizing the U.S. mails and/or interstate wire facilities. 

Par’s Pattern of Racketeering Activity

158. Par conducted and participated in the affairs of the Walgreens/Par/Hrp Enterprise 

through a pattern of racketeering activity, including above-described acts that are indictable 

under 18 U.S.C. § 1341, relating to mail fraud, and 18 U.S.C. § 1343, relating to wire fraud. 

During the five year Class Period, Par engaged in thousands of separate instances of use of the 

U.S. mails or interstate wire facilities in furtherance of the schemes. Each of these fraudulent 

mailings and interstate wire transmissions constitute “racketeering activity” within the meaning 

of 18 U.S.C. § 1961(1)(B). The last act of racketeering activity occurred within ten years of 

prior acts of racketeering activity. Collectively, these violations constitute a “pattern of 

racketeering activity” within the meaning of 18 U.S.C. § 1961(5), in which Par intended to 

defraud Plaintiff, members of the Class and other intended victims of the schemes. 

159. The fraudulent and unlawful prescription switching schemes misrepresented that 

prescriptions written for low-cost dosage forms of ranitidine and fluoxetine had been written for 

high-priced dosage forms manufactured by Par so that Walgreens and Par could reap massive 

unlawful profits. The schemes was calculated and intentionally crafted to ensure that Plaintiff 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 67 of 75 PageID #:67
65 

and members of the Class would make overpayments for these prescriptions. In designing and 

implementing the schemes, Par was at all times cognizant of the fact that Plaintiff, members of 

the Class and their agents (i.e., PBMs) would rely on Walgreens’ integrity and observance of the 

contracts and laws governing the filling of prescriptions for controlled substances. By 

intentionally and systematically misrepresenting that prescriptions were written for high-priced 

dosage forms (when they were not) and by failing to disclose these practices to patients, 

physicians, health benefit providers (including government programs) and PBMs, Walgreens, at 

Par’s behest, engaged in a fraudulent and unlawful course of conduct constituting a pattern of 

racketeering activity. 

160. Par’s racketeering activities amounted to a common course of conduct, with 

similar pattern and purpose, intended to deceive Plaintiff and members of the Class. Each 

separate use of the U.S. mails or interstate wire facilities employed by Par was related, had 

similar intended purposes, involved similar participants and methods of execution, and had the 

same results affecting the same victims, including Plaintiffs and members of the Class. Par 

engaged in the pattern of racketeering activity for the purpose of conducting the business affairs 

of the Walgreens/Par/Hrp Enterprise. 

Par’s Motive

161. Par’s motive for participating in the affairs of the Walgreens/Par/Hrp Enterprise 

was the prospect of reaping many millions of dollars in additional annual profits by dispensing 

and billing for high-priced Par products in place of the low-cost drugs actually prescribed by 

physicians. For example, Par’s presentation to Walgreens showed how Walgreens’ participation 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 68 of 75 PageID #:68
66 

in the scheme could result in total annual profits on ranitidine of $80,400,656 (for 150mg 

capsules) as compared to $5,143,588 (for 150mg tablets). Exhibit 2 [Par-Tx 0000163]. Par’s 

unit price for ranitidine capsules was five times more than its competitors’ prices for ranitidine 

tablets, id., but it’s involvement with the Walgreens/Par/Hrp Enterprise was designed to 

fraudulent maximize ranitidine capsule sales nonetheless. 

Damages Caused by the Prescription Switching Schemes

162. Par’s violation of federal law and its pattern of racketeering activity have directly 

and proximately caused Plaintiff and members of the Class to be injured in their business and 

property because Plaintiff and members of the Class have paid many millions of dollars for highpriced ranitidine capsules and fluoxetine tablets that were not prescribed by physicians. Plaintiff 

and members of the Class made the payments based on, and in reliance on, Walgreens’ 

representations that ranitidine capsules and fluoxetine tablets had been prescribed to the patients 

in questions. 

 WHEREFORE, Plaintiff requests judgment in its and the Class’s favor, and against Par, 

and for the following relief: 

(a) Compensatory damages in the amount to be determined at trial; 

(b) Treble the amount of compensatory damages; 

(c) Prejudgment interest along with the costs of bringing suit, including 

reasonable attorneys’ fees; and 

(d) Such other and further relief as the Court deems just and equitable. 

 

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67 

COUNT III

VIOLATION OF 18 U.S.C. § 1962(d) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Walgreens) 

163. Plaintiff realleges and incorporates by reference all prior paragraphs of this 

Complaint as if fully set forth herein. 

164. This action is brought under 18 U.S.C. § 1964(c) for violation of 18 U.S.C. § 

1962(d). 

165. As set forth herein, Walgreens agreed and conspired with various persons, 

including Par, to violate 18 U.S.C. § 1962(c) by directly and indirectly conducting and 

participating in the conduct of the affairs of the Walgreens/Par/Hrp Enterprise through a pattern 

of racketeering activity. 

166. Walgreens agreed and conspired to commit at least two of the predicate acts of 

mail and wire fraud in furthering the common purpose of the enterprise to commit multiple and 

ongoing frauds against Plaintiff and members of the Class by misrepresenting dosage forms of 

ranitidine and fluoxetine prescriptions. 

167. This conduct constitutes a conspiracy to violate 18 U.S.C. § 1962(c), in violation 

of 18 U.S.C. § 1962(d). 

168. As a direct and proximate result of the racketeering activities of the resulting 

violations of 18 U.S.C. § 1962(c), Plaintiff and the Class have been injured in their business and 

property. 

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68 

 WHEREFORE, Plaintiff requests judgment in its and the Class’s favor, and against 

Walgreens, and for the following relief: 

(a) Compensatory damages in the amount to be determined at trial; 

(b) Treble the amount of compensatory damages; 

(c) Prejudgment interest along with the costs of bringing suit, including 

reasonable attorneys’ fees; and 

(d) Such other and further relief as the Court deems just and equitable. 

COUNT IV

VIOLATION OF 18 U.S.C. § 1962(d) 

Racketeer Influenced and Corrupt Organizations Act 

(Against Par) 

169. Plaintiff realleges and incorporates by reference all prior paragraphs of this 

Complaint as if fully set forth herein. 

170. This action is brought under 18 U.S.C. § 1964(c) for violation of 18 U.S.C. § 

1962(d). 

171. As set forth herein, Par agreed and conspired with various persons, including 

Walgreens, to violate 18 U.S.C. § 1962(c) by directly and indirectly conducting and participating 

in the conduct of the affairs of the Walgreens/Par/Hrp Enterprise through a pattern of 

racketeering activity. 

172. Par agreed and conspired to commit at least two of the predicate acts of mail and 

wire fraud in furthering the common purpose of the enterprise to commit multiple and ongoing 

Case: 1:12-cv-00204 Document #: 1 Filed: 01/11/12 Page 71 of 75 PageID #:71
69 

frauds against Plaintiff and members of the Class by misrepresenting dosage forms of ranitidine 

and fluoxetine prescriptions. 

173. This conduct constitutes a conspiracy to violate 18 U.S.C. § 1962(c), in violation 

of 18 U.S.C. § 1962(d). 

174. As a direct and proximate result of the racketeering activities of the resulting 

violations of 18 U.S.C. § 1962(c), Plaintiff and the Class have been injured in their business and 

property. 

 WHEREFORE, Plaintiff requests judgment in its and the Class’s favor, and against Par, 

and for the following relief: 

(a) Compensatory damages in the amount to be determined at trial; 

(b) Treble the amount of compensatory damages; 

(c) Prejudgment interest along with the costs of bringing suit, including 

reasonable attorneys’ fees; and 

(d) Such other and further relief as the Court deems just and equitable. 

 

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70 

JURY TRIAL DEMANDED

Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands trial by jury. 

Dated: January 11, 2012 Respectfully submitted, 

 UNITED FOOD AND COMMERCIAL 

 WORKERS UNIONS AND EMPLOYERS 

 MIDWEST HEALTH BENEFITS FUND, 

 individually and on behalf of others 

similarly situated, 

 By:_/s/Patrick E. Cafferty_______

 One of its attorneys 

Patrick E. Cafferty Kenneth A. Wexler 

Anthony F. Fata Dawn M. Goulet 

CAFFERTY FAUCHER LLP WEXLER WALLACE LLP 

30 North LaSalle Street, Suite 3200 55 West Monroe, Suite 3300 

Chicago, IL 60602 Chicago, IL 60603 

Tel: (312) 782-4880 Tel: (312) 346-2222 

Fax: (312) 782-4485 Fax: (312) 346-0022 

pcafferty@caffertyfaucher.com kaw@wexlerwallace.com 

afata@caffertyfaucher.com dmg@wexlerwallace.com 

 

Jonathan D. Karmel 

THE KARMEL LAW FIRM 

221 N. LaSalle Street, Suite 1414 

Chicago, IL 60601 

Tel: (312) 641-2910 

Fax: (312) 641-0781 

jon@karmellawfirm.com

 

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71 

TABLE OF EXHIBITS

Exhibit # Description Bates No. Lisitza Ex.4

1 Letter from Janet Woodcock, M.D., FDA 

Center for Drug Evaluation and Research, 

December 1, 2000 

4

2 Walgreens Ranitidine Analysis (tablets vs. 

gelcaps) 

PAR-TX 0000163 5 

3 Excerpts from Testimony of Julie Trendowicz, 

June 19, 2008 

 6 

4 Bill Groth email 05/15/2001 W 11022 7 

5 Sworn Statement of William Groth, November 

15, 2006 

 8 

6 Tom Lawlor email, July 12, 2001 W 04526 9 

7 Walgreens/Par/Hrp W 00066-70 11 

8 July 25, 2001 letter from Ill. Dept. of Public 

Health to Thomas Lawlor 

W 00191-92 12 

9 Bill Groth email chain starting 07/24/2003 W 05213-21 13 

10 Tom Lawlor email chain November 17, 2004 W 09542-43 14 

11 Frank DeStefano email chain 10/12/2004 W 05260-61, W 

11048 

15 

12 Fluoxetine marketing materials PAR-TX 0006383 21 (last 

page) 

13 FUL Changes to Transmittal No. 37 23 

14 Nick DiMaio email 10/16/2001 PAR-VA 0109889 24 

15 State Board of Pharmacy Generic Substitution 

Policies. Presented by Cieplak Research Inc. 

April 17, 2001 

PAR-TX 0001470-

91 

28 

16 Pam Cieplak email 02/18/2001 PAR-VA 0923837 29 

17 State Board of Pharmacy Generic Substitution 

Policies (draft) 

PAR-VA 

0923838-43 

30 

18 Par Caremark Presentation 6/11/01 PAR-TX 0006054-

69 

32 

19 FDA’s August 2, 2001 approval letter to Par 33 

20 July 24, 2001 letter agreement from Par to 

John Ziebell 

W07270 35 

21 Tom Lawlor email 08/03/2001 

George Riedl email 09/21/2001 

W 06884, W 

04618-19 

37 

 

4 United States of America ex rel. Bernard Lisitza v. Par Pharmaceutical Companies, Inc., et al.,

No. 06-c-6131 (N.D. Ill.). [Doc. No. 35] 

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22 Scott Tarriff letter to George Riedl, August 23, 

2001 

W 00109 38 

23 Greg Primuth email 04/22/2002 W 04452-53 39 

24 Alphapharma email chain A 025902 17

25 Scott Tarriff testimony Oct. 23, 2008 27 

26 Summaries of UFCW transactional data 

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