Wednesday, November 6, 2013

McKesson to pay Wisconsin $13.9 million to settle Medicaid fraud charges

Wisconsin stands to collect more than $20 million from settlements with companies whose alleged practices inflated the cost of prescription drugs bought by the state's Medicaid program.
McKesson Corp., one of the country's largest pharmaceutical distributors, has agreed to pay $13.9 million to settle a lawsuit that alleges the company fraudulently reported inflated drug prices to increase payments to pharmacies from the state's Medicaid program, Attorney General J.B. Van Hollen announced Tuesday.
First DataBank, a unit of the Hearst Corp. and a defendant in the lawsuit, agreed to give the state $276,881.25 in credits for its services as part of the settlement.
Separately, Wisconsin will receive more than $7.2 million as its share of a $1.2 billion settlement with Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals, announced Monday. The settlement with the federal government and states stemmed from allegations that the company improperly marketed antipsychotic drugs.
The settlement with McKesson includes $11.6 million in restitution to the state's Medicaid program and $2.3 million for attorneys' fees and costs.
The lawsuit alleged that McKesson inflated the average wholesale prices for pharmaceuticals reported to First DataBank. The reported prices then were used to determine what the Medicaid program would pay for the drugs.
"By causing inflated drug prices to be reported and published and concealing that information, McKesson and First DataBank knew that the program would overpay for pharmaceuticals," Van Hollen said in a statement.
The state Department of Justice sued McKesson and First DataBank in October 2012. The lawsuit is separate from one filed in 2004 against dozens of pharmaceutical companies alleging a similar scheme to inflate drug prices. The lawsuit is pending in Dane County Circuit Court.
The U.S. Department of Justice and about two dozen states have filed similar lawsuits.
As of February, 10 defendants had settled with Wisconsin and agreed to pay a total of $17 million.
The settlements have been with smaller companies, and hundreds of millions of dollars could be at stake in the lawsuits.
The settlement with Johnson & Johnson and Janssen stemmed from allegations that Risperdal and Invega, two antipsychotic drugs, were promoted and marketed for uses not approved by the Food and Drug Administration.
The two companies also allegedly paid illegal kickbacks to health care professionals and pharmacies in nursing homes and other care facilities to induce them to promote or prescribe Risperdal in children, adolescents and the elderly, although it wasn't recommended for them.

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