Indiana and 28 other states have reached a $175 million settlement in a lawsuit accusing one of the country's largest drug wholesalers of overcharging Medicaid for prescription drugs, costing the states' Medicaid programs millions in overpayments.
Indiana is getting over $3.3 million in the deal with McKesson Corporation.
The settlement stems from a 2005 whistleblower lawsuit that was filed under federal and states' false claims statutes. The federal government settled its portion of the lawsuit for more than $187 million in April 2012.
"The False Claims Act is an important tool that allows private citizens to stop fraud against the taxpayers by initiating whistleblower lawsuits that states can investigate and join," said Indiana Attorney General Greg Zoeller. "It also deters future fraud to know that whistleblowers with courage in bringing a suit against large corporations that defrauded Medicaid will receive some share of the recovery as set out in the statute."
McKesson is a San Francisco-based wholesaler that buys prescription drugs from pharmaceutical manufacturers and resells them to health care programs such as Medicaid. A co-defendant in the lawsuits is a company in San Bruno, Calif., First DataBank Inc., that publishes the acquisition costs of thousands of types of prescription drugs. Medicaid relied upon First DataBank’s price lists to calculate the reimbursement amounts Medicaid paid pharmacies, physicians and clinics for prescription drugs it covered.
Under state and federal laws, Medicaid can pay no more for prescription drugs than the acquisition cost. The lawsuits alleged that McKesson and First DataBank colluded to artificially inflate the drug prices, thus causing Medicaid to overpay pharmacies and providers for thousands of different types of covered prescription drugs. Lawsuits brought by the federal government and states sought to recover the tens of millions of dollars Medicaid was overcharged between 2001 and 2009 when the scheme took place.
McKesson is not admitting any wrongdoing.
Since January 2009, the Indiana Attorney General's Medicaid Fraud Control Unit has participated in 17 settlements of whistleblower lawsuits against pharmaceutical companies over allegations of illegal off-label marketing. Through those settlements, Indiana Medicaid has recouped about $35 million in recovery for drug reimbursements wrongly paid out due to fraud against the program.
To learn more about how whistleblowers can file suit under the False Claims Act, visit this link: http://www.in.gov/attorneygeneral/2807.htm