McKesson Corporation, a large drug wholesaler is paying more than $190 million to settle False Claims Act allegations against it for causing Medicaid to overpay for drugs due to McKesson’s inflation of pricing information.  This settlement resolves the federal share of the Medicaid overpayments.  In addition to the $190 million figure, state governments will be separately negotiating with McKesson to resolve claims based on the states’ shares of Medicaid overpayments.

The lawsuit alleged that when McKesson reported this inflated pricing information to First DataBank, which publishes drug prices, it set into motion the publication of inflated Average Wholesale Prices (AWP) for those drugs.  These marked up percentages affected the prices on a broad variety of brand named drugs.  These published drug prices are used by most state Medicaid programs in the setting of payment rates for pharmaceutical drugs.

Federal and state governments have to date recovered in excess of $2 billion as the result of drug manufacturers reporting inflated AWP information to First DataBank and others who publish drug prices.  While the government and qui tam Relators, in particular Ven-A-Care of Florida Keys and its counsel, have made necessary qui tam False Claims Act recoveries base upon inflated AWP prices, Medicare price reporting is vulnerable to fraud, as are the other Medicaid false pricing scenarios which continue to affect Medicaid.

It is hoped that this settlement will act as a deterrent for other companies who report pricing data that affect government payment rates.

More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.