McKesson settles Medicaid drug price fixing claims
Illinois to get $10M in $151M deal with 30 states
11:45 AM CDT, July 27, 2012
U.S. drug wholesaler McKesson Corp. has agreed to pay $151 million to settle state claims that it inflated pricing information for over 1,400 brand name drugs, causing Medicaid to overpay for the drugs.
New York Attorney General Eric Schneiderman said the settlement resolves claims by 30 states that McKesson violated state and federal false claims acts. New York and California led negotiations for the states, Schneiderman said in a statement on Friday announcing the settlement. Illinois also is part of the settlement.
Kris Fortner, a spokesman for San Francisco-based McKesson, did not immediately respond to requests for comment. McKesson denied wrongdoing when it settled a similar case with the federal government in April. At that time, it agreed to pay $190 million over the federal portion of the Medicaid costs.
Medicaid, a health care program for people with low incomes, is jointly funded by the federal government and states.
In his statement, Schneiderman said McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical reimbursement.
McKesson marked up prices by 25 percent on brand name prescription drugs when reporting to First DataBank, although those prices did not reflect what the company actually charged for the drugs, court papers said.
New York will receive $64 million of the $151 million in restitution, Schneiderman said, more than any other state. Illinois will receive $10 million, according to a press releasr from Attorney General Lisa Madigan.
“This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits,” Schneiderman said in the statement.
California will receive more than $23 million, according to California Attorney General Kamala Harris. “We cannot allow dollars meant for patients to be diverted to inflate corporate profits,” Harris said in a statement.
Federal and state governments have recovered more than $2 billion from drug companies alleged to have reported inflated pricing information, U.S. Attorney Paul Fishman in New Jersey, who announced the federal settlement, said in April.
McKesson reported fiscal first-quarter earnings Thursday well above forecasts, helped by cost cuts and lower-than-expected taxes, but its revenue came in below Wall Street projections.
McKesson rose 62 cents to $92.88 in late morning trading.
The case is U.S., ex rel. Morgan v. Express Scripts Inc et al, U.S. District Court, District of New Jersey, No. 05-01714.