Giant drugstore chain Walgreens is under fire for allegedly overcharging consumers with health insurance for generic-drug prescriptions. Customers could wind up making co-payments that are three to four times higher than they would otherwise cost through a program offered by the company, which is part of Walgreen Boots Alliance (WBA).

According to a 28-page federal court filing by a California consumer on May 28, Walgreens allegedly violates legal prohibitions that forbid pharmacies from charging consumers a fee for their medicines that exceeds the "usual and customary" price. The retailer submitted claims to third-party providers for payment at "prices that Walgreens has knowingly and intentionally inflated," the filing said.

The "lynchpin" in the alleged scheme is Walgreens' Prescription Savings Club (PSC), a program that allows cash-paying customers to purchase 30- or 90-day supplies of 500 commonly prescribed generic drugs at discount prices ranging from $5 to $30, the suit said. Rivals such as Walmart (WMT), Target (TGT) and Costco (COST) also offer deals on generic drugs, though they report their respective prices accurately to insurers.

"The PSC prices, however, are often significantly lower than the 'usual and customary' prices that Walgreens reports to health insurance companies," the suit said, resulting in lower co-pays (under the PSC plan) than people with insurance wind up paying.