Dive Brief:
- Walgreens Boots Alliance reached a settlement with consumers who said the pharmacy chain misled them about Theranos’ fraudulent blood tests.
- Walgreens will pay $44 million into a fund, which will be paid out to members of the class, if an Arizona judge approves the deal, according to court documents filed Wednesday.
- The plaintiffs also reached a settlement with former Theranos COO Ramesh “Sunny” Balwani, but were unable to come to an agreement with former CEO and founder Elizabeth Holmes.
Dive Insight:
Theranos, the Palo Alto, California-based blood testing startup once valued at $9 billion, shut down in 2018 after Holmes was accused of criminal fraud. Holmes claimed the company’s Edison device could run a battery of tests using just a finger-prick of blood. Walgreens, in a partnership with Theranos, paid the company $140 million and opened more than 40 Theranos Wellness Centers across Arizona and California.
Customers who purchased a blood draw at one of the Walgreens sites filed class-action lawsuits in 2016, accusing Walgreens and Theranos of fraud and medical battery, and claiming they received the test under false pretenses.
After nearly seven years of litigation, the plaintiffs reached a settlement agreement with Walgreens, where class members will receive double the cost of their Theranos tests, plus an additional $10 base payment. Members of a Walgreens Edison subclass will receive an additional $700 to $1,000 for medical battery claims, according to a memorandum filed by the plaintiffs on Wednesday.
“There is no hyperbole in describing this litigation as hard fought and the settlement with Walgreens as hard-won,” the plaintiffs’ attorneys wrote in the filing, adding that the settlement would provide “an outstanding result” for the class.
Walgreens declined to comment on the settlement.
Holmes and Balwani were both convicted of fraud last year. The former CEO was sentenced to 11 years in prison, and the former COO faces a 13-year term.