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Attorney General J.B. Van Hollen Announces Settlement with McKesson and First Databank

MADISON — Attorney General J. B. Van Hollen announced that the State has reached an agreement in litigation charging pharmaceutical wholesaler McKesson Corporation and publisher First DataBank, Inc. with defrauding the Wisconsin Medicaid program.  A Department of Justice law enforcement action filed in Dane County alleged that McKesson and First DataBank conspired to violate the Wisconsin Medicaid fraud statute, Deceptive Trade Practices Act, and False Claims Act by inflating reported drug prices to increase pharmacies’ reimbursement from Wisconsin Medicaid.  Dane County Circuit Court Judge Richard G. Niess recently dismissed the lawsuit pursuant to the parties’ settlement.  McKesson is the largest pharmaceutical distributor and wholesaler in the United States.  First DataBank is a wholly-owned subsidiary or division of publisher The Hearst Corporation. 


Under the terms of the settlement agreement, McKesson has paid the State $13,916,115.60 and First DataBank has provided the State $276,881.25 in credits for its services.  The McKesson settlement payment included $11,596,763 in restitution to Wisconsin Medicaid and $2,319,352.60 for attorneys’ fees and costs. 


In Wisconsin, it is unlawful for any person or company to make representations that are untrue, misleading or deceptive with respect to the sale of pharmaceuticals.  McKesson reported false, fraudulent and inflated average wholesale prices to First DataBank, Inc., who in turn published this false information, causing the Wisconsin Medicaid program to overpay for the drugs it purchased.


 “This settlement reflects our continued efforts to protect Wisconsin taxpayers while continuing to provide medical assistance for our neediest citizens,” Van Hollen said.  “By causing inflated drug prices to be reported and published and concealing that information, McKesson and First DataBank knew that the program would overpay for pharmaceuticals.”


The State’s claims against McKesson and First DataBank are separate and distinct from another lawsuit asserting claims against dozens of pharmaceutical manufacturer defendants based upon a similar scheme in which the manufacturers falsely inflated their reported drug prices, causing Wisconsin Medicaid program to overpay for drugs.  Those claims against the manufacturer defendants remain pending in the Circuit Court of Dane County.


Wisconsin Medicaid is a healthcare assistance program for the needy and disabled jointly funded by the state and federal governments.


A copy of the complaint is available here.