FDB/McKesson Litigation -- New England Carpenters Health Benefit Fund v. First DataBank, Inc. and McKesson Corp.
Court: U.S. District Court for the District of Massachusetts
Case No.: 1:05-CV-11148-PBS
Wexler Wallace was Co-Lead Counsel in this massive class action against pharmaceutical wholesaling giant McKesson Corporation (“McKesson”) and pharmaceutical pricing publisher First DataBank, Inc. (“FDB”). Medispan, another pharmaceutical pricing publisher, was later named as a defendant in a separate case. The case addressed an unlawful 5% mark-up in the Average Wholesale Prices (“AWPs”) of various drugs, causing consumers and third party payors to overpay for pharmaceuticals. The case against McKesson settled for $350 million. In a separate settlement, FDB agreed to roll back AWPs, saving the Class many millions of dollars.
The Complaint alleged that, beginning in August 2001, McKesson and FDB conspired to wrongfully inflate the mark-up between two pricing benchmarks, Wholesale Acquisition Cost (“WAC”) and AWP, from 20% to 25%, with the effect of increasing AWP and thus the prices Plaintiffs and the Class had to pay for over 400 drugs. Plaintiffs charged McKesson and FDB with RICO violations, among other wrongdoing. Plaintiffs also alleged that Medispan negligently published the AWP of certain prescription drugs based on information received from FDB. As a result of McKesson and FDB’s conspiracy and Medispan’s negligence, consumers and third party payors overpaid for badly needed brand name drugs. To view the most recent Complaint, click here.
On August 3, 2009, Judge Patti B. Saris granted final approval of Plaintiffs’ $350 million settlement with McKesson. Plaintiffs believe this settlement to be one of the largest RICO settlements in history.
Plaintiffs also entered into a settlement with FDB and Medispan under which those pricing publishers agreed to pay $2.7 million and “rollback” their WAC-to-AWP mark-ups for over 1400 drug codes from 25% to 20%. The rollbacks will mean that in the future, insurance companies and other third-party payors will pay less for the drugs that are rolled back, resulting in an estimated $750 million in prospective savings to the Class. The rollbacks are intended to recapture for consumers and third-party payors amounts that were previously overpaid as a result of Defendants’ scheme. On September 3, 2009, the First Circuit Court of Appeals rejected challenges to the District Court’s final approval of this settlement, permitting the settlement to go into effect.
To find out more about the McKesson settlement, please visit www.McKessonAWPSettlement.com.