A federal court in Massachusetts has given preliminary approval to a settlement in a case involving false drug prices by a drug wholesaler. The total settlement of the suit is $350 million. Consumers will get some of their money back. The suit alleges that McKesson and FirstDataBank inflated the average wholesale price (AWP) of prescription drugs. The AWP is always set by the manufacturer and is passed on by a reporting company like FirstDataBank. According to the suit, the Defendants inflated a “mark-up factor” used to calculate the AWP of over 400 drugs.
Specifically, FirstData Bank, a publisher of drug data, told the pharmaceutical industry that it derived the AWP from “a survey” of wholesalers in an attempt to verify the prices reported by the manufacturer. In reality, however, McKesson was the only wholesaler that FirstData actually surveyed. The two companies increased the AWP markup from 20 to 25 percent for over 400 drugs, without any economic justification. To conceal the scheme, the companies only increased the markup when another price announcement was made by a drug manufacturer. While the Defendants deny any wrongdoing, they have agreed to reimburse eligible consumers. McKesson, a Fortune 500 health care services company, has agreed to pay $350 million into a settlement fund. Only $60 million of this will go directly to consumers with the rest allotted to be paid to “non-governmental third parties,” including insurance companies. It should be noted that this case doesn’t include state Medicaid programs. The fraud in those cases involved only the drug manufacturers and not the reporting services.
Eligible class members include anyone who paid a co-payment for one of the settlement drugs between August 1, 2001 and March 15, 2005, and uninsured or underinsured consumers who paid the full value of one of the drugs between August 1, 2001 and January 23, 2009. According to the Plaintiffs’ lawyer, Steve W. Berman of Hagens Berman Sobol Shapiro, eligible class members would “receive some money back in the near future if they file a claim.” Consumers who think they may be eligible to recover should fill out a claim form, available at the official settlement Web site, www.mckessonawpsettlement.com.
Source: Consumer Affairs
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