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May 1, 2012

McKesson Reaches Settlement: False Claims Act suit involving inflated drug prices resolved

According to an article featured in Los Angeles Daily Journal, by reporter Robert Iafolla entitled "Pharma giant settles fraud case," the U.S. Justice Department recently announced that San Francisco-based pharmaceutical company McKesson Corp., agreed to a more than $190 million settlement to resolve federal allegations that the company violated the False Claim Act (FCA) by giving inflated pricing reports of prescription drugs to First DataBank, whose published drug prices many state Medicaid programs use to set payment rates.

The Justice Department told the Daily Journal that this most recent settlement "resolves claims based on the federal share of Medicaid overpayments … while state governments can separately negotiate with the company on claims based on their shares of the overpayments."

McKesson continues to face nearly a dozen lawsuits filed by State Attorneys General involving allegations that it defrauded their Medicaid programs by inflating drug prices.

"Defendants are often motivated to settle with the federal government first because of the enormous size of potential damages and the prospect of facing the resources that the Justice Department could mount against them in litigation," Motley Rice member and securities lawyer Mark Labaton said in the article.

Read about qui tam cases and whistleblower protection and how Motley Rice consumer protection lawyers fight corporate fraud.