McKesson - Municipalities

Hagens Berman represented cities, counties and municipalities that alleged they overpaid for medications because McKesson Corporation (NYSE: MCK) engaged in a scheme to fraudulently inflate the price of more than 400 brand-name prescription drugs.

Municipalities pay for drugs used by their employees who are enrolled in self-insured health plans, and in some cases administer community clinics and other non-Medicaid or Medicare public assistance programs.

According to the complaint, filed on Aug. 7, 2008 in the U.S. District Court for the District of Massachusetts in Boston, McKesson violated federal racketeering laws by rigging the average wholesale price (AWP) of brand-name drugs while raising the spread between the published AWP and the wholesale acquisition cost from 20 to 25 percent. The complaint alleged that this was done in an effort to increase profits by currying favor with McKesson’s large retail pharmacy clients. The complaint alleged that McKesson cleverly concealed the scheme so that payors like municipalities would wrongfully attribute the increases to drug manufacturers.

The scheme was alleged to have inflated the price of more than 400 brand-name prescription drugs, including blockbusters such as Prozac, Lipitor, Zocor and Bioxx.

Another case brought by consumers and third-party payors settled in 2008 for $350 million. The settlement was given final approval by Judge Saris on Aug. 3, 2009.

Hagens Berman also reached significant settlements on behalf of five states over similar claims.