February 9, 2012
McKesson Corporation has reached a $190 million settlement with the United States over allegations that the drug wholesaler violated the False Claims Act. The government alleged that McKesson reported inflated drug pricing information, causing Medicaid overpayment for pharmaceuticals prescribed to program beneficiaries. According to the U.S. Department of Justice, McKesson made the false reports to First DataBank, which publishes drug prices that most state Medicaid programs use to determine payment rates for pharmaceuticals.
The federal and state governments jointly fund the Medicaid program. This settlement only resolves allegations concerning the overpayments made by the federal government. The $190 million settlement figure includes $3 million in interest. State governments may still pursue McKesson for the states’ shares of the Medicaid overpayments.
The drug pricing data that McKesson is alleged to have inflated involves the “Average Wholesale Price” (AWP) benchmark that Medicaid and other federal health care programs use to determine payment rates for prescription drugs. The United States claimed that McKesson reported overly high mark-up percentages to First DataBank for many brand name drugs, causing First DataBank to publish inflated AWPs for those drugs.
State and federal governments have worked together to recover in excess of $2 billion from drug manufacturers that allegedly inflated AWP pricing information to First DataBank and other publishers of drug pricing information. This is the type of health care fraud that is often discovered when a courageous whistleblower files a claim on the government’s behalf under the False Claims Act. Under the qui tam provisions of that legislation, the whistleblower is entitled to receive a share of the government’s recovery.
Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.
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