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Class Action Against McKesson Over Drug Prices

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Seattle, WA: A United States District Court judge has certified a nationwide, class-action lawsuit against McKesson Corporation (NYSE:MCK) on behalf of municipalities claiming McKesson engaged in a scheme to inflate fraudulently the price of more than 400 brand-name prescription drugs, including blockbusters such as Prozac, Lipitor, Zocor and Vioxx.

This class action represents cities, counties and other municipalities that overpaid for medications because of the price inflation scheme outlined in the complaint, originally filed on August 7, 2008, in U.S. District Court for the District of Massachusetts in Boston.

The suit claims McKesson conspired to rig the average wholesale price (AWP) of brand-name drugs while raising the spread between the published AWP and the wholesale acquisition cost from 20 to 25 percent in an effort to increase profits by currying favor with its large retail pharmacy clients. The Complaint alleges that McKesson cleverly concealed the scheme so that payors like municipalities would wrongfully attribute the increases to drug manufacturers.

In an earlier ruling in the consumer case, Judge Saris cited internal documents where McKesson boasted that by the end of 2004 nearly "99%" of all brand-name drugs were set at a higher price as a result of the scheme.

Judge Saris has certified the case for liability for those non-state and non-federal government entities that paid inflated rates for drugs from August 1, 2001, to June 2, 2005, as a result of the AWP scheme.

Municipalities pay for drugs used by their employees enrolled in self-insured health plans, and in some cases administer community clinics and other non-Medicaid or Medicare public assistance programs.

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