McKesson Corp. is settling allegations of drug pricing inflation with Virginia Medicaid, in one of the largest such recoveries for a state.
The company will pay $37 million to resolve charges of artificially increasing the prices of 400 brand-name prescription drugs through the published average wholesale price information that Virginia Medicaid and other state programs use for drug reimbursement.
Virginia's case was set to go to trial in San Francisco, after Attorney General Ken Cuccinelli decided to pursue charges against McKesson separate from the company's $151 million settlement with 29 other states last year over wholesale price manipulation allegations, stemming from a 2005 whistleblower lawsuit that also led to a $187 million settlement with the federal government.
"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," Cuccinelli, a Republican and outspoken critic of Affordable Care Act who's running for governor, said in a media statement.
Cuccinelli said the $37 million settlement is the largest recovery by any state Medicaid fraud control unit against McKesson for average wholesale price inflation allegations.
San Francisco-based McKesson, the nation's largest healthcare services supplier with annual sales nearing $125 billion, has denied any wrongdoing in settling with Virginia and others, and cited the goal of avoiding litigation and long-term uncertainty in the decision to resolve the allegations.
As part of the settlement, about $30 million will go to Virginia's general fund healthcare account, $16.8 million of it for "compensatory damages" to the state Medicaid program and $13.5 million for penalties.