The Kentucky attorney general has filed a lawsuit in a state court alleging that McKesson, one of the largest distributors, and First DataBank, which publishes a database for prescription drug prices, conspired to artificially inflate wholesales prices for more than 1,800 brand-name meds and, consequently, cost state taxpayers tens of millions of dollars in Medicaid reimbursements.
Specifically, Kentucky Attorney General Jack Conway alleges the companies concocted a scheme in which they "fraudulently inflated" the average wholesale prices published by First DataBank for the drugs, because they knew the Kentucky Medicaid program was required by law to use the inflated prices to calculate reimbursement to pharmacies and other providers.
The lawsuit alleges the wholesale acquisition cost to average wholesale price mark-up was boosted from 20 percent to 25 percent. Yet, McKesson allegedly proposed the scheme despite the fact that there was no commensurate increase in the actual WAC-based prices that wholesalers charged their retail customers for the drugs.
"This office has repeatedly sent the message to prescription drug companies that we will not tolerate fraud and abuse in the Medicaid program," Conway says in a statement in which he charges the companies violated Kentucky Consumer Protection Act (here is the lawsuit).
Last month, the Michigan AG filed a similar lawsuit against the same companies (read here). Meanwhile, a First DataBank spokeswoman declined to comment. We have reached out to McKesson and will update you accordingly.