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 Friday, May 30, 2008 |
Connecticut AG files lawsuit against drug company for alleged price inflation
Deirdre Jurand at 4:06 PM ET
[JURIST] Connecticut filed a lawsuit [complaint, PDF] against pharmaceutical distribution giant McKesson Corp. [corporate website] in US District Court for the District of Massachusetts Thursday, accusing the company of violating federal anti-racketeering laws by inflating drug prices for state-funded health care. Connecticut Attorney General Richard Blumenthal [official profile] alleged that McKesson and drug-price publisher First DataBank [corporate website] conspired to increase the difference between the retail price of prescription drugs and the average wholesale price by 5 percent beginning as early as 2001. The increase in the price difference allowed for greater profits [Bloomberg report] for health care providers and companies such as McKesson, but cost consumers millions in extra dollars on drugs such as Allegra, Celebrex, Nexium and Valium. The state is seeking monetary damages for the alleged anti-racketeering violations, as well as alleged violations of anti-trust and state fair trade laws. Reuters has more.
This is not the first time that McKesson and First DataBank have been sued for alleged price inflating. A 2005 class-action lawsuit led by the New England Carpenters Health Benefits Fund [fund website] and includes more than 11,000 members, accused [class certification and complaint, PDF] McKesson of artificially inflating prices, resulting in as much as a $4 billion total overpayment [Business Insurance report] by consumers. Last week, the city of San Francisco filed a similar lawsuit [complaint and press release, PDF], accusing McKesson of artificially inflating drug costs for more than 50,000 San Franciscans.
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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible, ad-free format.
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