Hagens Berman Sobol Shapiro: Nationwide Class Action Certified in Average Wholesale Price Litigation

Industry giant, McKesson, facing billions of dollars in damages.

Mar 24, 2008, 01:00 ET from Hagens Berman Sobol Shapiro

    BOSTON, March 24 /PRNewswire/ -- Last week a United States District
 Court judge certified a nationwide class-action lawsuit against McKesson
 Corporation (NYSE:   MCK) that could become the largest class action in the
 United States, potentially totaling $7 billion in damages for consumers and
 third-party payers.
     (Logo: http://www.newscom.com/cgi-bin/prnh/20080317/AQM144LOGO)
     The lawsuit, filed by Seattle-based Hagens Berman Sobol Shapiro in 2006
 on behalf of third party payers and consumers, claims that McKesson engaged
 in a scheme to fraudulently inflate the price of more than 400 prescription
 drugs, including blockbusters such as Prozac, Lipitor, Zocor, Vioxx and
     "We have been fighting this battle on behalf of smaller groups for
 years," said Hagens Berman managing partner and lead attorney Steve Berman.
 "With this ruling we now have the opportunity to represent millions of
 Americans nationwide who have been affected by McKesson's unlawful
     The judge's ruling allows this case to move forward on behalf of two
 classes: consumer purchasers, which includes anyone who made a co-payment
 for prescription medication from August 1, 2001 through May 15, 2005, and
 all third-party payers that made a payment or reimbursement based on the
 inflated average wholesale price (AWP) during the class period.
     The original lawsuit claims McKesson and First DataBank, a publishing
 company, reached a secret agreement on how the average wholesale price
 would be set for brand-named drugs, and in doing so, raised the spread
 between the published AWP and the actual acquisition costs from 20 to 25
 percent in an effort to increase profits.
     According to documents cited in the court's order McKesson communicated
 the price increase to First Databank, who published the information, even
 amid questions by manufacturers who recognized the impact to consumers and
 third-party payers. McKesson did so to raise the profits for its large
 clients like Rite Aid and Walgreen's.
     In her ruling, Judge Saris cited internal documents where McKesson
 boasted that by the end of 2004 nearly "99%" of all brand-name drugs were
 set at a higher price as a result of the scheme. The order also noted that
 pharmacy benefit managers (PBMs) benefited from the scheme and cited a top
 secret Express Scripts document where an executive cautioned to "put a lid
 on" the financial benefit ESI was receiving from the price increase.
     Attorneys estimate that damages on behalf of consumers could total from
 $200 to $800 million and damages on behalf of third-party payers will
 exceed $5 billion.
     In August of 2007, Judge Saris initially certified the class of
 third-party payers, but not for damages, which last week's ruling includes.
 McKesson argued that third-party payers each have a unique contract with
 its PBMs, which allows for negotiation in drug pricing.
     The lawsuit claims McKesson violated the federal Racketeer Influenced
 and Corrupt Organizations (RICO) act, and if found guilty, could be forced
 to pay treble damages under the RICO statute as well as under various
 consumer protection statutes.
     For more information on this case and to sign up as a consumer or
 third-party payer you can visit the Hagens Berman Web site at
     About Hagens Berman Sobol Shapiro
     Hagens Berman Sobol Shapiro, is based in Seattle with offices in
 Chicago, Cambridge, Los Angeles, Phoenix and San Francisco. Since 1993, it
 has developed a nationally recognized practice in class-action and complex
 litigation. Among recent successes, HBSS has negotiated a $300 million
 settlement in the DRAM memory antitrust litigation, one of the largest
 anti-trust settlements in history; a $340 million recovery on behalf of
 Enron employees; a $150 million settlement involving charges of illegally
 inflated charges for the drug Lupron, and served as co-counsel on the
 Visa/Mastercard litigation which resulted in a $3 billion settlement, the
 largest anti-trust settlement to date. HBSS served as counsel in a $850
 million Washington Public Power Supply settlement and represented
 Washington and 12 other states against the tobacco industry that resulted
 in the largest settlement in history. For a complete listing of HBSS cases,
 visit http://www.hbsslaw.com.
CONTACTS: Steve Berman (206) 623-7292 Hagens Berman Sobol Shapiro Steve@hbsslaw.com Mark Firmani (206) 443-9357 Firmani + Associates Inc. Mark@firmani.com

SOURCE Hagens Berman Sobol Shapiro