Judge certifies class action against McKesson
A U.S. District judge yesterday certified a class-action lawsuit against McKesson for allegedly conspiring to inflate the average wholesale price (AWP) of prescription drugs used to determine payments by Medicaid and insurance plans.
In her ruling, Judge Patti Saris certified the case as a class action representing U.S. healthcare consumers who made co-payments on the medications. The suit was originally filed in the U.S. District Court in Boston in October 2006 by Seattle-based Hagens Berman Sobol Shapiro on behalf of consumers and third-party payors.
Saris wrote in her ruling that she would defer ruling on whether another class involving third-party payors, or insurance companies, would be certified for damages.
According to the complaint, beginning in late 2001, McKesson and First Databank, a publishing company, reached a secret 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.
The complaint alleges that McKesson communicated the price increase to First Databank, who published the information.
Earlier this year First Databank reached a settlement with the plaintiffs which includes a roll-back of AWP prices and an agreement to stop publishing the data all together.
In her ruling certifying the class, Saris cited that prior to 2000, McKesson estimated that 20 percent of drug manufacturers used a 25 percent markup, but by 2002, that number had increased to 95 percent.
"As a result of this artificial increase in the markup ... thousands of TPP [third-party payors] public entities and consumers have had their drug prices increased," Saris wrote in her ruling.
The case claims that San Francisco-based McKesson violated the federal Racketeer Influenced and Corrupt Organizations (RICO) act, and various California consumer laws. If found guilty in the case, McKesson could be forced to pay treble damages under the RICO statute, according to Hagens Berman Sobol Shapiro.
In her ruling, Judge Patti Saris certified the case as a class action representing U.S. healthcare consumers who made co-payments on the medications. The suit was originally filed in the U.S. District Court in Boston in October 2006 by Seattle-based Hagens Berman Sobol Shapiro on behalf of consumers and third-party payors.
Saris wrote in her ruling that she would defer ruling on whether another class involving third-party payors, or insurance companies, would be certified for damages.
According to the complaint, beginning in late 2001, McKesson and First Databank, a publishing company, reached a secret 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.
The complaint alleges that McKesson communicated the price increase to First Databank, who published the information.
Earlier this year First Databank reached a settlement with the plaintiffs which includes a roll-back of AWP prices and an agreement to stop publishing the data all together.
In her ruling certifying the class, Saris cited that prior to 2000, McKesson estimated that 20 percent of drug manufacturers used a 25 percent markup, but by 2002, that number had increased to 95 percent.
"As a result of this artificial increase in the markup ... thousands of TPP [third-party payors] public entities and consumers have had their drug prices increased," Saris wrote in her ruling.
The case claims that San Francisco-based McKesson violated the federal Racketeer Influenced and Corrupt Organizations (RICO) act, and various California consumer laws. If found guilty in the case, McKesson could be forced to pay treble damages under the RICO statute, according to Hagens Berman Sobol Shapiro.