Twenty-nine states have reached a $151 million settlement in a lawsuit alleging one of the country’s largest drug wholesalers inflated prices for hundreds of prescription drugs. The agreement with San Francisco-based McKesson Corp. settles allegations that the company deliberately inflated drug prices by as much as 25 percent, causing the states’ Medicaid programs to overpay millions of dollars in reimbursements. An investigation by state and federal agencies found that McKesson inflated the prices of more than 1,400 brand-name drugs, including these commonly prescribed medications such as Adderall, Allegra, Ambien, Celexa, Lipitor, Neurontin, Prevacid, Prozac and Ritalin.
California, where the alleged overpayments went on from August 2001 to December 2009, will receive about $24 million of the settlement. California Attorney General Kamala Harris announced the settlement. She had this to say:
In these difficult budget times, it is crucial that California’s scarce public resources support the urgent needs of our state. We cannot allow dollars meant for patients to be diverted to inflate corporate profits.
The settlement results from a 2005 whistleblower lawsuit that was filed under federal and states’ false claims statutes. It was alleged that McKesson inflated average wholesale prices reported to First Data Bank, which many state Medicaid programs, including Alabama, use to set payment rates for pharmaceutical reimbursement. The federal government settled its portion of the lawsuit for more than $187 million in April of this year. Unfortunately, the Alabama Supreme Court has given the drug companies a “get-out-of-jail-free pass” in the Medicaid fraud (AWP) litigation. New York will receive $64 million in restitution as part of this settlement. New York Attorney General Eric Schneiderman was correct when he said:
Pharmaceutical distribution companies are not above the law. This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits.
Besides California and New York, states covered in the settlement include Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming. The District of Columbia also was covered. The wrongful and fraudulent conduct involving the overpricing of drugs is considered to be “fraud” by the courts in all states with the lone exception of Alabama, which is very hard to understand.
Source: Associated Press
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