Conway sues over drug prices

by Bryan Cohen |
Jul. 26, 2011, 2:00pm


FRANKFORT, Ky. (Legal Newsline) - Kentucky Attorney General Jack Conway announced a lawsuit on Monday against a pharmaceutical wholesaler and a compendium publisher that allegedly conspired to inflate average wholesale prices.

Conway alleges that McKesson Corporation and First DataBank Inc. conspired to inflate AWPs for more than 1,800 brand name prescription drug products, which caused the Kentucky Medicaid program to overpay for the drugs by tens of millions of dollars.

"This office has repeatedly sent the message to prescription drug companies that we will not tolerate fraud and abuse in the Medicaid program," Conway said. "This complaint, which alleges fraudulent inflation of average wholesale prices and resulting injury to our Medicaid program, is another signal of my continued commitment to enforcing the laws that protect Kentuckians."

Federal and state regulations and laws require the Kentucky Medicaid program to reimburse providers for prescription drugs based on the estimated acquisition cost for each drug, which is determined based on the published AWP.

The lawsuit alleges that in August 2001, the companies began engaging in a scheme to fraudulently inflate the AWPs of thousands of prescription drug codes and that they failed to disclose their misconduct and actively concealed it. Conway alleges that the two companies specifically intended to increase the AWP-based reimbursement amounts to be paid by the program, which would cause taxpayer money to increase the profits of their customers.

The complaint alleges that the companies violated the Kentucky Consumer Protection Act, the Kentucky Medicaid fraud statute, the false advertising statute and the theft by deception statute. The lawsuit also alleges common law fraud, civil conspiracy and negligent misrepresentation.

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