A major grocery operator agreed to a multimillion-dollar settlement after federal investigators said its pharmacy reporting practices led to inflated reimbursements from government health programs. The company settled claims tied to how “usual and customary” prescription prices were reported, not how customers were charged at store registers. Whistleblower action, federal enforcement and a broader industry spotlight on pharmacy billing drove the case, which will push most of the settlement dollars back to the government and participating states.
Ahold Delhaize USA agreed to pay $40 million to resolve allegations that it submitted inflated prescription pricing data to federal health care programs. The dispute centers on historical reporting tied to certain pharmacy programs and reimbursement formulas rather than on everyday in-store discounts shoppers might see. That distinction matters because the government says reporting choices affect what taxpayer-funded programs ultimately pay.
Federal authorities alleged the company did not list discounted prescription rates as its “usual and customary” prices when billing Medicare Part D, Medicaid and Tricare. When pharmacies fail to reflect the lower, discounted rates in their submitted figures, reimbursement formulas can produce higher payouts from government programs. The result, according to regulators, is a systemic overpayment that shifts costs onto taxpayers.
Of the $40 million settlement, roughly $32.9 million will go to the federal government while the remainder will be distributed to participating states. The allegations were first brought forward by pharmacist whistleblower Lawrence LaBenne, who worked at a supermarket pharmacy location in Pennsylvania. Under the civil settlement, LaBenne will receive more than $6 million for reporting the asserted conduct, reflecting the role qui tam suits play in False Claims Act enforcement.
“Federal healthcare programs rely on pharmacies reporting accurate pricing information used in the applicable payment formulas,” Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division said in a statement. Regulators emphasize that accurate reporting is essential to keep federal reimbursement rates honest, and they argue that misreporting undermines program integrity and leads to unnecessary expense for taxpayers.
Scott J. Lampert, acting deputy inspector general for investigations at the U.S. Department of Health and Human Services Office of Inspector General, warned that inaccurate pricing practices can erode trust in taxpayer-funded health care programs. Enforcement officials have been scrutinizing how “usual and customary” prices are defined and recorded because variations in reporting can materially change what Medicare and Medicaid pay out to pharmacies.
The retailer operates a collection of supermarket chains with local pharmacies, including well-known banners like Giant, Hannaford, Stop & Shop and Food Lion, many of which have offered prescription savings programs to enrolled customers. Ahold Delhaize emphasized that the settlement resolves the claims and does not include an admission of fault. “We have admitted no wrongdoing in this matter and have fully cooperated with the government throughout the review of these government billing questions related to programs discontinued nearly a decade ago,” the company said in a statement.
The settlement specifically addresses pharmacy billing procedures and does not challenge consumer-level pricing at grocery store checkouts. Ahold Delhaize also stressed that its local pharmacy brands remain focused on serving customers and supporting community health needs, signaling the company’s intent to keep pharmacy operations active while resolving the dispute. For patients who shop its stores, everyday discounts and membership pricing remain separate from these historic billing issues.
The timing of the settlement follows a recent corporate earnings update in which Ahold Delhaize said U.S. net sales and comparable sales were affected by pharmacy pricing changes tied to the Inflation Reduction Act. Management estimated that those changes would reduce U.S. pharmacy sales by about $450 million, a hit tied to policy shifts rather than to this settlement specifically. Together, the regulatory attention and legislative change have put pharmacy reporting and margins under new pressure.
The Ahold Delhaize matter is part of a broader pattern of scrutiny across the pharmacy industry, where other major retail pharmacy operators have faced False Claims Act litigation and regulatory probes over reimbursement practices. While details vary from case to case, many of the disputes hinge on how “usual and customary” prices are calculated and reported when billing government programs. With whistleblower incentives and heightened oversight in play, regulators appear likely to keep pursuing cases that seek to recover overpayments tied to reporting practices.
