by Ken Alltucker - Sept. 19, 2012 02:19 PM
The Republic | azcentral.com
Drug wholesaler McKesson Corp. improperly raised the prices of brand-name prescription drugs, such as Allegra, Lipitor and Nexium, costing Arizona consumers and businesses millions of dollars, the Arizona Attorney General alleged in a lawsuit.
The Maricopa County Superior Court lawsuit filed Sept. 14 alleges that McKesson, the nation's largest drug wholesaler, "artificially inflated" the average wholesale price of more than 400 brand-name prescription drugs, and theextra costs were passed along to Arizona businesses and consumers.
"The prices of nearly all brand-name prescription drugs were inflated, including several of the most popular drugs on the market," Arizona Attorney General Tom Horne said in a press release issued today.
McKesson purchases drugs from pharmaceutical companies and sells them to retailers, including Albertson's Costco, Safeway, Target, Wal-Mart. The lawsuit alleged that McKesson raised the spread between the average wholesale price charged to retailers and the amount it paid for the drugs.
The lawsuit alleged that the marked-up prices were passed along to health insurers, businesses and consumers.
Representatives of the San Francisco-based company did not immediately return calls .
Horne cited the example of the acid-reflux drug Nexium, which McKesson marked up 5 percent in 2004 for an additional $100 million profit based on $4 billion in sales of the drug that year, Horne said.
Among the 400 brand-name drugs that the lawsuit alleges were improperly marked up: Allegra, Azmacort, Celebrex, Coumadin, Flonase, Lipitor, Neurontin, Nexium, Prevacid and Valium.
"Since this claim alleges markup irregularities on more than 400 drugs over multiple years, the consumer damages were enormous," Horne said.
The lawsuit seeks penalties of $10,000 for each violation of Arizona's Consumer Fraud Act.
It's not the first time Arizona has waged a legal battle against San Francisco-based McKesson.
Earlier this month, The Arizona Court of Appeals rejected the Arizona Medicaid program's effort to levy more than $200 million in reimbursement and penalties against McKesson. The court did not address the Arizona Health Care Cost Containment System's allegations that McKesson overcharged the state program for drugs and other products, but the court said Arizona's effort to collect money from McKesson based on the "scheme" was beyond its reach.
An AHCCCS investigation found that McKesson raised the average wholesale price 5 percent, increasing the Medicaid program's costs by more than $50 million.
AHCCCS demanded nearly $112 million from McKesson based on its own regulations, which allow it to recover twice as much as it lost. The agency also levied $101 million in penalties.
McKesson countered that AHCCCS had no right to assess such penalties, and the appellate court agreed.
20 Sep, 2012
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Source: http://www.azcentral.com/business/articles/2012/09/19/20120919arizona-prescription-drugs-prices-lawsuit.html
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