Despite reaching settlements with 29 states and the federal government last year, McKesson ($MCK) has continued to face price-manipulation litigation throughout 2013. And the financial cost is ticking ever higher, with McKesson now paying almost $14 million to settle a case brought by Wisconsin.
The Wisconsin lawsuit made similar allegations to last year's multistate and federal cases, for which McKesson paid $151 million and $190 million, respectively, to settle. In the latest suit, Wisconsin accused McKesson and wholesale price publisher First DataBank of inflating the fees for 1,700 brand-name drugs. This allegedly led to the Wisconsin Medicaid program overpaying pharmacy reimbursements by "tens of millions of dollars."
McKesson denied any wrongdoing throughout last year's settlements, and it has maintained this stance in the Wisconsin case. "Given the inherent uncertainty of litigation, we determined that this settlement was in the best interest of our employees, customers, suppliers and shareholders. We continue to believe that the average wholesale price claims against McKesson are without merit," a company spokesperson told Pharmalot. McKesson is paying Wisconsin $13.9 million, while First DataBank agreed to provide $277,000 in credit for its services.
The settlement comes as McKesson works to wrap up its $8.3 billion takeover of German drug distributor Celesio. Having offered a 39% premium over the three-month volume-weighted average stock price, McKesson persuaded the majority shareholder and its supervisory board to sell its stake. However, Bloomberg now reports billionaire hedge-fund manager Paul Singer may be pushing for a higher price. Singer's company, Elliott Management, has built a 10% share of the voting rights in Celesio and has a history of getting involved in M&A. Celesio stock is now trading above the €23 a share offered by McKesson.
- read the Pharmalot article
- view the lawsuit (PDF)
- here's the Bloomberg piece