McKesson Corporation Enters Into $151 Million State Settlement for Inflated Drug Prices

^{Posted by Kristin Graham Koehler and Amy Markopoulos}

On July 28, 2012, McKesson Corporation entered into a national settlement with 29 states and the District of Columbia adding to the growing list of drug companies who have settled with the federal and state governments for allegations of reporting inflated prices to the databases used to set Medicaid and Medicare prices.

In April, the federal government settled the federal portion of this lawsuit for over $187 million. When announcing the federal settlement with McKesson, U.S. Attorney Paul Fishman said that over $2 billion has been recovered by state and federal governments from drug companies that have reported inflated prices to databases.

Under the July 28 settlement, McKesson agreed to pay more than $151 million to the states for violations of the false claims act. The settlements resolve a 2005 whistleblower case that charged McKesson with inflating the average wholesale prices that it reported to First Data Bank, a publisher of drug prices, by as much as 25% between Aug. 1, 2001, and Dec. 31, 2009. Medicaid relied upon First DataBank’s price lists to calculate the reimbursement amounts Medicaid paid pharmacies, physicians and clinics for prescription drugs it covered. As a result, it is alleged that State Medicaid programs had to overpay for a variety of drugs. The settlement covered more than 1,400 brand name prescription drugs, including commonly prescribed medications such as Adderall, Allegra, Ambien, Celexa, Lipitor, Neurontin, Prevacid, Prozac and Ritalin.

New York and California led the national settlement team. Under the settlement, New York will receive $64 million and California will receive $23 million.