June 2, 2008

Connecticut's activist AG, Richard Blumenthal, last week sued the San Francisco pharmaceutical distribution company, McKesson Corp. using state consumer-protection statutes and federal RICO law in charging that the company artificially inflated drug costs for consumers and state-funded health care programs. (Reuters story. Racketeering?) From Blumenthal's May 29th news release:

The lawsuit accuses McKesson of conspiring with First DataBank to inflate the average wholesale prices (AWP) for their pharmaceuticals - creating a larger "spread" between the cost by the state and Medicare program and the actual charges to health care providers, such as physicians and pharmacies....Because federal and state agencies, like DSS, use AWP when setting pharmaceutical reimbursement rates, providers could increase their profits by prescribing or dispensing drugs from McKesson.

The case is State of Connecticut v. McKesson Corp., 08- 10900, U.S. District Court, District of Massachusetts (Boston). (Legal Newsline has the complaint.) In March, U.S. District Judge Patti Saris in Boston certified a nationwide class-action suit against McKesson and First DataBank, with the class being more than 11,000 private consumers and third-party payors. (Copy of Saris' order.)