Walgreens Challenges Nearly $1B Arbitration Award Over Alleged Breach of COVID-19 Test Business Contract

Retail pharmacy giant Walgreens Boots Alliance Inc WBA has reportedly taken legal action against an arbitration award of nearly $1 billion issued to telemedicine provider PWNHealth in a contract dispute. 

PWNHealth, also known as Everly Health Solutions, has sought affirmation of the arbitration award.

Walgreens contends that the $987 million award is excessively high, exceeding the allowable damages under the contract by twelvefold, Reuters reported on Tuesday. 

The company argues that such an award would set a record under the federal Lanham Act, a law governing false advertising and trademark protection.

The dispute stems from allegations by Everly that Walgreens breached the terms of a COVID-era business contract by diverting COVID-19 tests away from Everly’s physician network to its in-house operations. Walgreens asserts that the relationship soured after it began using its pharmacists to order tests.

Everly claims that Walgreens continued to display its trademark on its website and diverted tests from the agreed workflow, leading to the arbitration initiated in 2022. 

The company asserts that the arbitration award, issued by David Brodsky of the American Arbitration Association, should stand without challenge.

In response, Walgreens denies breaching its agreement with Everly and argues that the arbitrator exceeded his authority by disregarding the liability cap outlined in the contract. 

The company insists that its actions were not willful but an inadvertent oversight.

In a statement, Everly expressed satisfaction with the arbitration outcome and has moved to confirm it in court. Meanwhile, Walgreens maintains its stance, emphasizing that the arbitration award should be overturned due to its excessive nature and the arbitrator’s alleged overreach.

In January, Walgreens agreed to pay $360 million to healthcare insurer Humana Inc HUM to resolve a lawsuit alleging that the pharmacy chain had overcharged prescription drug reimbursements. 

The lawsuit originated from a $642 million award Humana received in a private arbitration against Walgreens in 2022. 

Humana accused Walgreens of inflating prescription drug prices over many years. Walgreens had previously sued to challenge this award but has now settled the matter.

Price Action: WBA shares are up 2.01% at $20.92 on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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