Connecticut Sues McKesson Over Price Fixing
Make a commentBy Ed Silverman // May 29th, 2008 // 2:25 pm
The attorney general, Richard Blumenthal, filed the lawsuit over allegations the big distributor illegally inflated wholesale costs for hundreds of brand-name meds, including Celebrex, Lipitor, Flonase, Prevacid, Nexium and Valium. The move comes one week after San Francisco did the same thing.
The lawsuit, which was filed in federal court in Boston, accuses McKesson of violating federal racketeering and state consumer protection laws by conspiring with First DataBank, which publishes prescription drug prices, to inflate average wholesale prices for pharmaceuticals. The lawsuit, however, doesn’t name First DataBank as a defendant. Here is the lawsuit.
McKesson’s “illegal and deceptive practices” caused consumers and state-funded health care programs to overpaying by millions of dollars, Blumenthal says in a statement. “The victims of this surreptitious scheme included patients and taxpayers who were overcharged by companies seeking higher sales and profits. McKesson exploited publicly funded programs that serve our must vulnerable citizens.”
The suit is related to a class action lawsuit originally filed in 2005 in Boston. Two months ago, US District Court Judge Patti Saris certified consumers and third-party payors as classes. Connecticut becomes the second government plaintiff to seek to recover damages caused by the alleged price-fixing scheme attributed to McKesson and First DataBank.
The lawsuit alleges that McKesson and First DataBank conspired to raise, fix and maintain average wholesale prices for 400 brand-name meds at 25 percent more than the wholesale acquisition costs, which is what health plans and insurers pay. Those prices had previously been marked up 20 percent.
A McKesson spokesman sent us this comment: “We have not yet reviewed yesterday’s filing by the State of Connecticut. The claims appear to be based on the same allegations made in a 2005 class action suit filed in Boston. As with the other pending litigation in Boston filed against McKesson Corporation and First DataBank, we believe the allegations lack merit and intend to vigorously defend ourselves. As we have previously stated, McKesson does not set Average Wholesale Prices (AWPs) and does not set the drug prices paid by consumers or health plans.”