Conn. AG sues McKesson over alleged pricing inflation

HARTFORD, Conn. Connecticut Attorney General Richard Blumenthal has filed a lawsuit in the U.S. District Court in Boston against McKesson, alleging the company illegally raised wholesale costs for hundreds of brand-name drugs, according to the Associated Press.

The lawsuit contends that McKesson arbitrarily increased the difference between what pharmacies pay wholesalers for prescription drugs and what they charge health plans and insurers. Pharmacies typically buy drugs from wholesalers at a price based on a benchmark called the wholesale acquisition cost, but charge consumers, insurance companies and health plans based on the average wholesale price.

Blumenthal said the greater the difference between the average wholesale price and the wholesale acquisition cost, the greater the profit potential for pharmaceutical benefit managers and other middlemen.

The lawsuit alleges that McKesson and price publishers like First DataBank, who Blumenthal believes McKesson conspired with to raise, fix and maintain average wholesale prices for 400 brand-name drugs at 25 percent more than the wholesale acquisition costs, when those prices had previously been marked up 20 percent.

Blumenthal said that because state and federal agencies base their reimbursement rates on average wholesale prices, doctors, pharmacies and other health care providers could increase their profits by prescribing or dispensing medications from McKesson. This then led to McKesson increasing its stake in the market share.

McKesson has stated that it has not yet reviewed the lawsuit.