Nick Rees Oct. 21, 2013, 6:21pm

RICHMOND, Va. (Legal Newsline) - Virginia Attorney General Ken Cuccinelli announced Friday that Virginia will receive $37 million as part of a settlement with one of the largest pharmaceutical wholesalers in the country.

McKesson Corp. will pay the $37 million over allegations that it violated the Virginia Fraud Against Taxpayers Act by conspiring to inflate prices for more than 400 brand-name prescription drugs.

McKesson allegedly conspired to inflate published average wholesale price information, which is used by the Virginia Department of Medical Assistance Services to set Medicaid reimbursement rates. The inflated prices lead to Virginia's Medicaid program overpaying for certain drugs.

"This $37 million recovery shows that we will not tolerate Medicaid fraud in Virginia," Cuccinelli said. "It robs the taxpayers and it robs money needed for medical services for the poor. Our office refused to participate in a national settlement led by the Department of Justice because we needed to send a message that Virginia will fight to protect its Medicaid program from fraud and because the original settlement didn't cover the total loss to our Medicaid program."

A total of $16.9 million of the payment is for compensatory damages to the state's Medicaid program and $13.5 million is for penalties.

The settlement represents the largest state Medicaid Fraud Control Unit recovery against McKesson in the average wholesale price case. Virginia refused to join a previous settlement that saw 29 states recover a total of $151 million.

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