McKesson Shells Out $190 Million in Fines for Inflated Pricing

McKesson Shells Out $190 Million in Fines for Inflated Pricing

April 27th, 2012 // 12:34 pm @


Yet another violation of the False Claims Act. This time, McKesson agreed to pay more than $190 million for reporting inflated pricing for a number of prescription meds, which caused Medicaid to overpay. The big wholesaler reported inflated prices to First Data Bank, which publishes prices that are used by most state Medicaid programs to set payment rates for pharmaceuticals.

The $190 million represents the $187 million settlement and interest, but state governments can negotiate separately with McKesson to resolve claims based on the states’ shares of the Medicaid overpayments.

Of course, it’s all related to that wacky “Average Wholesale Price” benchmark used by Medicaid and other state programs to set the prices they’ll pay for drugs. I* say “wacky” because no one can actually agree on what exactly the price of a drug is, since the companies all negotiate separately with insurers, pharmacies, etc. To an outsider, pricing seems to predicate on obscure parameters such as if it’s a full moon on the second Tuesday in January (I kid, I kid).

“This case demonstrates the Department of Justice’s commitment to ensuring that Medicaid funds are expended appropriately,” says Acting Assistant Attorney General Delery in a statement. “Companies that report pricing data that affect government payment rates, whether those companies are manufacturers, wholesalers, or otherwise, are required to report that data accurately.”

Of course, McKesson is not the first company nor will it be the last one to get in trouble for pricing shenanigans. The Justice Department reports recouping more than $2 billion from drugmakers for reporting inflated AWP to First Data Bank and other publishers of drug prices.

Last week, Idaho won $2.6 million from GlaxoSmithKline for charges of overpricing to that state’s Medicaid program. Back in January, units of Actavis Group agreed to pay $118.6 million to the U.S. government and four states to resolve claims that caused these entities to overpay for drugs.

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