Drugstores Rebuffed by U.S. Supreme Court on West Virginia Suit

The U.S. Supreme Court rejected an appeal from Walgreen Co. (WAG), Wal-Mart Stores Inc. and four other drug retailers accused of violating a West Virginia law aimed at saving consumers money on prescriptions.

The appeal sought to force a lawsuit against the companies into federal court, where corporate defendants often fare better. A federal appeals court said the suit, filed by West Virginia Attorney General Darrell McGraw, should proceed in state court instead.

Target Corp. (TGT), Kroger Co. (KR), Sears Holdings Corp. (SHLD)’s Kmart chain and a unit of CVS Caremark Corp. (CVS) joined Deerfield, Illinois-based Walgreen and Bentonville, Arkansas-based Wal-Mart in seeking Supreme Court intervention. The issue in the appeal was whether McGraw’s suit was a class action, which under federal law the defendants could move out of state court.

The West Virginia law requires pharmacies to fill prescriptions with generic drugs whenever possible and pass on the savings to customers. The state, which is seeking disgorgement of alleged overcharges and civil penalties, alleges the pharmacies aren’t passing on the lower wholesale costs they pay for generic drugs.

The case is CVS Pharmacy v. West Virginia, 11-224.