Home » Judge Certifies Class-Action Against McKesson in Pricing Battle
Judge Certifies Class-Action Against McKesson in Pricing Battle
August 29, 2007
A U.S. District judge certified a class-action lawsuit Tuesday against pharmaceutical distributor McKesson Corp., San Francisco, CA, in a legal battle over drug pricing, according to law firm Hagen Berman.   ; The suit, originally filed in U.S. District Court in Boston, MA, in October 2006 on behalf of consumers and third-party payers, alleges that McKesson -one of the largest pharmaceutical distributors in North America -entered into a secret agreement to artificially inflate the reported average wholesale price of thousands of drugs, a benchmark used by Medicaid and insurance plans to determine payment to pharmacies.   ; In her ruling, Judge Patti Saris certified the case as a class action representing millions of healthcare consumers who made co-payments on what the suit alleges were artificially inflated drug prices.   ; According to the complaint, beginning in late 2001, McKesson and First Databank, a publishing company, reached an agreement on how the AWP would be set for brand-named drugs, and in doing so, raised the spread between the published AWP and the actual acquisition costs in an effort to increase profits.   ; Earlier this year First Databank reached a settlement with the plaintiffs which includes a rollback of AWP prices and an agreement to stop publishing the data.   ; According to the complaint, McKesson communicated the price increase to First Databank, who published the information.   ; In her ruling certifying the class, the judge cites that before 2000, McKesson estimated that 20% of drug manufacturers used a 25% markup, but by 2002, that number had increased to 95%.   ; The case claimed that McKesson violated federal Racketeer Influenced and Corrupt Organizations (RICO) act, and California consumer laws.