The Michigan attorney general has filed a lawsuit in a state court alleging that McKesson, one of the largest distributors, and the Hearst media conglomerate, which owns theFirst DataBank and its drug database, conspired to artificially inflate wholesales prices and, consequently, cost taxpayers millions of dollars in Medicaid reimbursements.
The companies allegedly violated the Michigan Medicaid False Claims Act and common law by knowingly publishing false average wholesale prices for certain meds - including Lipitor, Zyprexa, Allegra, Celebrex and Advair - between 2001 and 2009, according to the lawsuit. During this time, Michigan Medicaid spent nearly $2 billion on 890 brand-name drugs, as well as approximately $80 million on approximately 1,900 generics.
The lawsuit alleges the wholesale acquisition cost to average wholesale price mark-up was boosted from 20 percent to 25 percent in order to boost relationships with pharmacies and maintain customers that would benefit from larger reimbursement spreads. Meanwhile, McKesson publicly denied any involvement in raising AWPs, even though the state alleges emails indicate otherwise (here is the lawsuit).
"It's an insult to hard-working citizens when fraudulent practices cause their taxpayer dollars to be wasted or misused," Michigan Attorney General Bill Schuette says in a statement. "We will bring the hammer down on anyone who defrauds the state."
We have asked McKesson and First Databank for comment and will update you accordingly. UPDATE: A McKesson spokeswoman sends us this: “This case is another in a series of cases that were previously fully reported by the company in our public filings. As with the other cases, McKesson continues to believe that the reimbursement benchmark cases involving public entities lack merit and will continue to vigorously defend against those cases as they are filed.”
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This will be interesting. We'll see if Michigan's absolute preemption law is somehow able to be used even to block this kind of fraud, as it was to block another AG-initiated case.
Schuette is himself from the overall group that brought Michigan our statute (not that he was personally involved as far as I know). So a potentially interesting story in the making.