Monday, July 30, 2012

McKesson Corporation (NYSE:MCK ) to Shell out $151 Million to Settle Lawsuit

McKesson Corporation (NYSE:MCK) of San Francisco that is facing legal accusations of allegedly inflating prices of prescription drugs has settled for paying $151 million to as many as 29 states as well as the District of Columbia.

One of the drug wholesale giants, McKesson has been involved in a serious lawsuit against its intentional inflation of drug costs by a margin of 25 percent from the year 2001to 2009. According to the reports of state and federal agencies, McKesson has raised the costs of more than 1,400 branded drugs, including Prozac, Neurotin, Celexa, Allegra, Prevacid, Ambien and Lipitor.

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If McKesson covers for losses through the proposed settlement, California would receive an amount of $2.4 million, as per Kamala Harris, Attorney General of the state. The money will be used on the state Medicaid program. Harris has also mentioned that millions of dollars cannot be diverted to benefit corporate industry when California is undergoing a difficult budget time. Public resources are scarce and needs of the state must be given priority.

According to Kris Fortner, representative of McKesson, the allegations are without merit. The drug wholesaler giant thought it best to agree for this settlement as it seemed to stand for the best interests of its customers, suppliers, shareholders and employees. Fortner has mentioned that the company has never indulged in any attempts of inflating the costs of drugs.

The McKesson settlement incepted from the whistleblower lawsuit that was filed under the false claim statues of federal and state agencies in 2005. The lawsuit had claimed that First Data Bank had reports of inflated wholesale prices of drugs sold by McKesson. First Data Bank is used by several state Medicaid programs for setting payment rates for pharmaceutical compensation.

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The federal government has reportedly settled for more than $187 million as its portion of the lawsuit. According to officials at the office of Eric Schneiderman, state Attorney General, New York is supposed to receive the biggest share of the McKesson settlement, which amounts to $36 million. Schneiderman said that pharmaceutical companies need to abide by laws and abstain from making millions of dollars through illegal methods.

Apart from New York and California, the settlement would cover Colorado, New Jersey, New Mexico, West Virginia, Nebraska, Georgia, New Hampshire, Illinois, Iowa, Minnesota, Michigan, Pennsylvania, North Dakota, Texas, Nevada, South Dakota, Florida, Idaho, and West Virginia. 

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