$151 Million in Restitution to be Paid to States by Drug Wholesaler McKesson

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McKesson Corp, a drug wholesaler in the United States, has come to an agreement to settle claims that the company inflated pricing information for some 1,400 brand name drugs. The inflated prices caused Medicaid to pay more than it should have for those 1,400 drugs. The settlement is for $151 million and will be divided amongst 30 states in the country that filed claims against the company.

The settlement will help resolve claims made by 30 states against McKesson, according to Eric Schneiderman, the Attorney General for New York. The claims stated that McKesson violated false claims acts at the state and federal levels. The states were led by California and New York during the negotiation process of the settlement.

  

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Back in April, McKesson had to settle a very similar case with the federal government but the company denied doing anything wrong. In April, the company settled on a payment of $190 million for the federal section of the Medicaid costs in the case. Medicaid is funded by both states and the federal government and is for people who need healthcare but have low incomes.

The inflated drug prices were sent by McKesson to First DataBank, which publishes drug prices. The data published by First DataBank is used by Medicaid in most states to set payment rates for reimbursement to pharmacies and pharmaceutical companies, according to the statement from Schneiderman. According to the states’ complaints, McKesson marked up the prices of the drugs by 25 percent for brand name prescriptions when it sent the data to First DataBank. According to court documents, the prices sent to First DataBank were not what McKesson charged for the drugs. From the $151 million settlement, New York will be given $64 million, according to Schneiderman. New York will receive the most money from the restitution settlement.

“This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits,” Schneiderman said in a statement released on Thursday of this week.

Kamala Harris, the Attorney General for California, said that the state will be receiving just over $23 million from the settlement. “We cannot allow dollars meant for patients to be diverted to inflate corporate profits,” Harris said in a statement.

In April, 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. The announcement of the federal settlement was made in New Jersey.