The suit is related to a class action lawsuit originally filed in 2005 in Boston. Two months ago, US District Court Judge Patti Saris certified consumers and third-party payors as classes. San Francisco, however, becomes the first government plaintiff to seek to recover damages caused by the alleged price-fixing scheme attributed to McKesson and First DataBank, a publisher of prescription drug prices.
According to the complaint, the intent of the conspiracy was to increase the difference between the "wholesale acquisition cost" (which is the basis for what pharmacies pay wholesalers for prescription drugs) and the "average wholesale price" (the basis for what pharmacies charge health plans and insurers for those drugs).
The difference between the two prices was allegedly hiked from 20 percent to 25 percent arbitrarily, forcing health plans and consumers to pay artificially inflated prices on numerous meds. As a result, numerous governmental entities in California - including the San Francisco Health Plan and the State Medi-Cal program - overpaid by hundreds of millions of dollars.
"With the lack of effective regulation on pricing in the pharmaceutical industry in the US, the onus must on occasion fall on consumers to exact a reasonable standard to prevent illegal price manipulation," John Grgurina Jr., ceo of San Francisco Health Plan, says in a statement. "While litigation is never a pleasant ordeal and not one we enter into lightly, it's a necessary means to what we hope will be a fair and equitable end."