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July 27, 2012
Washington state to net $4.8 million in national settlement with drug wholesaler

McKesson will pay states to resolve drug pricing case

OLYMPIA – Washington State Attorney General Rob McKenna today announced that Washington state, as part of a national settlement against the McKesson Corporation, has resolved allegations that the company violated the Federal False Claims Act and various state false claims acts by reporting inflated pricing information for a large number of prescription drugs, overcharging the state’s Medicaid program.

The case revolves around the “Average Wholesale Price” (AWP) benchmark used by most states to set pharmacy reimbursement rates for drugs dispensed to Medicaid beneficiaries.   Washington state alleges that McKesson, one of the largest drug wholesalers in the country, reported inflated AWP pricing data to First Data Bank (FDB), a publisher of drug prices, thereby inflating many AWPs that are used by the state to set reimbursement rates. 

In April, the federal government settled the federal portion of this lawsuit for over $187 million. Today’s announcement covers the Medicaid portion of the settlement. Washington state’s recovery through the national settlement is $10.3 million, of which a little more than half is returned to the federal government to cover its share of losses in the state due to McKesson’s conduct. Washington state’s Medicaid program will net $4.8 million as a result of the settlement. Settlement amounts for individual states are based on how much was improperly spent in each state as a result of a drug company’s conduct over a specific period of time.

The suit was filed in U.S. District Court in New Jersey.  To date, federal and state governments have also recovered more than $2 billion from drug manufacturers that were alleged to have reported inflated AWP information to FDB and other publishers of drug prices.

Washington state was represented by a national settlement team from California and New York, working through the National Association of Medicaid Fraud Control Units.


Janelle Guthrie, Director of Communications, (360) 586-0725


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