McKesson to Pay States $151 Million to Settle Drug Pricing Allegations

By Kristin Jones

McKesson Corp. (MCK) has agreed to pay California and 29 other states a total of $151 million to settle allegations that it inflated prescription drug prices, causing states' Medicaid programs to overpay pharmacy reimbursements by millions of dollars, according to the California Department of Justice.

The payment is in addition to an April settlement that had McKesson paying more than $190 million to the federal government to resolve similar claims.

McKesson wasn't immediately available to comment, but has previously said that it didn't violate any laws or manipulate drug prices.

The states alleged that the drug wholesaler deliberately inflated average wholesale drug prices it reported to First Data Bank, a publisher of drug prices, by as much as 25%.

McKesson's actions caused the state of California to overpay on branded prescription drugs from August 2001 through December 2009. California'sMedicaid program, known as Medi-Cal, sets the reimbursement rates for pharmacies based on reported wholesale drug prices.

California's recovery of the settlement is roughly $23.6 million. Along with the District of Columbia, the other 29 states involved in the settlement include New York, Illinois, and Pennsylvania.

McKesson has continued to see strong performance in its U.S. distribution business. It recently reported that its first-quarter earnings rose 33% on improved sales and a one-time gain.

Write to Kristin Jones at kristin.jones@dowjones.com

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McKesson to Pay States $151 Million to Settle Drug Pricing Allegations