Reuters: Regulatory News: UPDATE 2-McKesson pays $190 mln in US drug pricing accord

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UPDATE 2-McKesson pays $190 mln in US drug pricing accord Apr 26th 2012, 17:49 Thu Apr 26, 2012 1:49pm EDT * McKesson said to report inflated drug prices * Medicaid said to be overcharged * McKesson said government claims are without merit * Shares of McKesson rise 0.4 percent By Jonathan Stempel and Debra Sherman April 26 (Reuters) - McKesson Corp, one of top U.S. drug wholesalers, has agreed to pay more than $190 million to settle claims that it had violated the federal False Claims Act by reporting inflated pricing information for many prescription drugs, causing Medicaid to overpay for them. The settlement was announced Thursday by U.S. Attorney Paul Fishman in New Jersey. According to the government, McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical products. The government accused McKesson of marking up prices on a variety of drugs by 25 percent between Aug. 1, 2001, and March 31, 2005. It said McKesson's conduct had caused the United States and individual states to pay inflated reimbursements on Medicaid claims submitted between Aug. 1, 2001 and Dec. 31, 2009. "We have no tolerance for those who take advantage of that system to bring in more business by falsely increasing reimbursements to retailers," Fishman said in a statement. San Francisco-based McKesson did not admit liability or wrongdoing in agreeing to settle. According to settlement papers, McKesson "expressly denies" the government's charges, as well as those of a whistleblower, David Morgan, in a related civil lawsuit filed in New Jersey federal court. In a prepared statement, the company said: "We continue to believe that the AWP (average wholesale price) claims against McKesson are without merit. McKesson adhered to all applicable laws and regulations, and we do not set AWPs. We did not manipulate drug prices, and did not violate any laws. "However, when we weighed our conviction that we did not violate any laws against the inherent uncertainty of litigation, we determined that this settlement was in the best interest of our employees, customers, suppliers and shareholders." Fishman said state governments may negotiate separately with McKesson to resolve claims based on their shares of the Medicaid overpayments. He also said federal and state governments had recovered more than $2 billion from drug companies alleged to have reported inflated pricing information. Whistleblowers can receive 25 percent of settlement amounts in False Claims Act cases, depending on how much work they contribute. Neither Morgan nor his lawyer could be immediately located for comment. Morgan filed his lawsuit in 2005, and added McKesson as a defendant in 2006. The case remains under seal. In morning trading, McKesson shares rose 0.5 percent to $91.83 on the New York Stock Exchange. The case is U.S. ex rel. Morgan v. Express Scirpts Inc et al, U.S. District Court, District of New Jersey, No. 05-01714. McKesson shares were up 0.4 percent to $91.72 in afternoon trading on the New York Stock Exchange. Link this Share this Digg this Email Reprints

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