News

WW Announces $350 million RICO settlement with McKesson Corporation

WW announces a $350 million settlement with pharmaceutical distributor McKesson Corporation ("McKesson") to settle allegations that the company fraudulently inflated the prices of more than 400 brand name prescription drugs by manipulating the pricing benchmarks for those drugs. The proposed settlement resolves claims brought on behalf of consumers and third-party payors.

The lawsuit, which has been pending since 2005 and was scheduled for trial beginning December 1 of this year, alleged that McKesson conspired with drug pricing publisher First DataBank ("FDB") to inflate the mark-up between Wholesale Acquisition Cost ("WAC") and Average Wholesale Price ("Average Wholesale Price") from 20% to 25%. Plaintiffs alleged that McKesson did so in order to curry favor with its large pharmacy clients, who make a profit off the "spread" between AWP and WAC. WW is co-lead counsel in the case and had a key role in litigating the case and preparing it for trial.

Plaintiffs have proposed that the $350 million be divided between insurance companies and other entities that paid for the drugs ($288,675,000), consumers who paid a percentage of the price of the drug ($20,900,000) and consumers who paid cash for the drug ($40,425,000).

Because this is a class action settlement, the Court must approve it. The hearing on preliminary approval of the settlement is currently scheduled for December 11, 2008.

For a copy of the settlement agreement click here. For a copy of Plaintiffs' preliminary approval papers click here.