Pharmaceutical Field - Drug distributor pays $190m to settle mark-up charges

Drug distributor pays $190m to settle mark-up charges

McKesson, the largest US drug distributor, has agreed to pay $190m to settle charges that it illegally ‘marked up’ prescription drug prices.

The government claims that McKesson quoted inflated drug prices to the state-based Medicaid programme.

McKesson denies any liability, but says it is making the payment to avoid the costs and uncertainty of litigation.

The distributor is charged with violating the False Claims Act by reporting inaccurate pricing data on a range of branded pharmaceuticals to First DataBank, a reference used by state Medicaid programs to set payment rates.

According to New Jersey US Attorney Paul Fishman, McKesson marked up the drug prices it reported to First DataBank by 25% between 2001 and 2005.

The $190m represents $187m settlement plus interest. McKesson may still face claims from individual states, which could be negotiated separately.

McKesson said the charges were “without merit” and that it had not manipulated drug prices.

However, the company stated, in view of “the inherent uncertainty of litigation, we determined that this settlement was in the best interest of our employees, customers, suppliers and shareholders.”

The US federal and state authorities have recovered $2bn in total from drug suppliers who are alleged to have given inflated wholesale price information to publishers of drug prices.