McKesson to pay $151 million to states in drug pricing accord

NEW YORK (Reuters)—U.S. drug wholesaler McKesson Corp. has agreed to pay $151 million to settle state claims that it inflated pricing information for over 1,400 brand name drugs, causing Medicaid to overpay for the drugs.

New York Attorney General Eric Schneiderman said the settlement resolves claims by 30 states that McKesson violated state and federal false claims acts. New York and California led negotiations for the states, Mr. Schneiderman said in a statement on Friday announcing the settlement.

In April, McKesson agreed to pay $190 million to settle with the federal government over its portion of Medicaid costs.

McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical reimbursement, Mr. Schneiderman said.

McKesson marked up prices by 25% on brand name prescription drugs when reporting to FirstData, although the prices didn't reflect what the company actually charged for the drugs, court papers said.

"This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits," Mr. Schneiderman said in the statement.

McKesson denied wrongdoing when it settled with the federal government in April.

New York will receive $64 million of the $151 million in restitution, Mr. Schneiderman said, more than any other state.

Federal and state governments have recovered more than $2 billion from drug companies alleged to have reported inflated pricing information, U.S. Attorney Paul Fishman in New Jersey, who announced the federal settlement, said in April.

McKesson reported fiscal first-quarter earnings Thursday well above forecasts, helped by cost cuts and lower-than-expected taxes, but its revenue came in below Wall Street projections.