Blumenthal trying to take down drug company

John O'Brien May 29, 2008, 3:14pm


HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal is claiming a major pharmaceutical company violated federal racketeering laws when it artificially inflated the cost of drugs.

Blumenthal filed suit Thursday in federal court against McKesson Corp., accusing the company of conspiring with First Data Bank in a scheme that raised the average wholesale price of their prescription drugs.

"Millions of dollars are due to taxpayers and consumers who paid inflated drug costs as a result of McKesson's illegal and deceptive practices," Blumenthal said. "Our lawsuit demands money back, because McKesson manipulated the drug market -- conspiring to inflate costs for hundreds of drugs."

The costs of Allegra, Azmacort, Celebrex, Flonase, Lipitor, Neurontin, Nexium, Prevacid and Valium were all affected, Blumenthal says in the complaint.

He claims McKesson and its co-conspirators, not named as defendants, raised the average wholesale price (AWP) of brand-name drugs at 25 percent over the wholesale acquisition cost (WAC), which is a benchmark price established by manufacturers and used by them and wholesalers to calculate prices to retailers.

The greater the difference between the AWP and WAC, the better profit potential middlemen like pharmaceutical benefit managers have, Blumenthal said.

First Data Bank is one such company that compiles and publishes AWPs. Consumers, health insurers and governmental entities rely on the AWP when buying prescription drugs.

First Data Bank claimed it figured the 25 percent markup by conducting a survey of wholesalers, Blumenthal said, though it was actually in cahoots with McKesson.

McKesson did not return a message seeking comment.

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