Keith Loria Oct. 19, 2010, 3:37pm
HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal announced on Tuesday that the State will receive $15 million in a settlement from a pharmaceutical distributor that allegedly artificially inflated drug costs.
The McKesson Corporation allegedly conspired to inflate the average wholesale prices of a number of pharmaceuticals, creating a larger "spread" between the cost by the state Medicaid program and the actual charges to health care providers.
These inflated costs affected over 400 brand name drugs, including Allegra, Asmacort, Celebrex, Flonase, Lipitor, Neurontin, Nexium, Prevacid and Valium.
Federal and state agencies pay for drugs based on the AWP, and the company's actions created windfall profits to its pharmacy customers, which increased McKesson's market share at the expense of state taxpayers and consumers, Blumenthal says.
"This settlement provides millions of dollars back to taxpayers who paid inflated drug costs because of McKesson's illegal and deceptive practices," Blumenthal said.
"McKesson manipulated the drug market -- conspiring to inflate costs for hundreds of drugs and exploiting public programs that serve our most vulnerable citizens. The victims of this scheme included patients and taxpayers who relied on these drugs to treat asthma, allergies, pain, arthritis and cholesterol."
From the settlement, $9 million will reimburse the State's share of its Medicaid program, $3 million will go towards reimbursing ConnPace and $700,000 will go to the state drug assistance program for AIDS patients. The remaining $2.3 million is a civil penalty to the State.
Blumenthal alleged that McKesson allegedly conspired with First DataBank to raise, fix and maintain the AWPs of brand name drugs at 25 percent over the published wholesale acquisition cost.