Pharmaceutical distributor McKesson Corp. announced it would pay $350 million to settle a class-action lawsuit alleging the company conspired with First DataBank to inflate drug prices paid by consumers and third-party payers.
In a conference call, Chairman and Chief Executive Officer John Hammergren was adamant that the allegations are false. We did not manipulate drug prices and did not violate any laws, Hammergren said.
McKesson has denied and continues to deny each and all of the claims and contentions alleged in the class action, and has denied and continues to deny that it has committed any violation of law or engaged in any wrongful act alleged, or that could have been alleged, in the class action," the settlement said.
According to the complaint brought by the New England Carpenters Health Benefits Fund, McKesson and First DataBank in 2001 allegedly came up with a scheme to artificially raise and fix the spread between wholesale average costs and average wholesale prices published by First DataBank, violating the Racketeer Influenced and Corrupt Organization Act. An antitrust lawsuit based on the same allegations was dismissed in August.
The agreement remains subject to approval by the U.S. District Court in Boston, and it does not dispose of similar lawsuits brought by federal, state and local agencies. McKesson has set aside a reserve fund of $143 million for those claims, which the company likewise denies. Executive Vice President and Chief Financial Officer Jeff Campbell said that he expected the total pre-tax charge of $493 million to swing the company to a loss in its third quarter, which ends Dec. 31.
First DataBank reached a separate settlement agreement in 2006 and amended it in May 2008, agreeing to pay $1 million and reduce the markup factor for many drugs in its list. A hearing for final approval of that agreement is set for Dec. 17.