Home » McKesson May Face Treble Damages in Class-Action
McKesson May Face Treble Damages in Class-Action
March 25, 2008
McKesson Corp. must face a class-action lawsuit filed by consumers and third-party payers claiming the drug distributor illegally inflated the wholesale price of prescription medicines, according to a recent court ruling by a U.S. District Court. The class action was certified on Wednesday.
The judge initially certified the suit in August 2007, but not for damages, which the most recent ruling includes. Attorneys estimate that damages on behalf of consumers could total from $200 to $800 million and damages on behalf of third-party payers will exceed $5 billion.
The lawsuit claims McKesson violated the federal Racketeer Influenced and Corrupt Organizations (RICO) act, and if found guilty, could be forced to pay treble damages.
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.
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-name drugs, and in doing so, raised the spread between the published AWP and the actual acquisition costs in an effort to increase profits.
Last year, First Databank reached a settlement with the plaintiffs which includes a rollback of AWP prices and an agreement to stop publishing the data.
McKesson did not comment on the most recent ruling.