Zoeller: Indiana to receive $3.3M in drug wholesaler settlement


Zoeller: Indiana to receive $3.3M in drug wholesaler settlementAG: Whistleblower exposed scheme to overcharge Medicaid for RX drugs

INDIANAPOLIS – The State of Indiana will recover more than $3.3 million in a settlement with McKesson Corporation to resolve lawsuits alleging the drug wholesaling company schemed to overcharge Medicaid for prescription drugs, Indiana Attorney General Greg Zoeller announced today.

The Indiana Medicaid program will receive $3,314,939.48 as the state’s share of a larger multistate settlement with McKesson totaling $175 million. The settlement resolves a multi-state whistleblower lawsuit filed under the False Claims Act in federal court in New Jersey as well as a separate Indiana-only lawsuit filed in Marion County Superior Court in Indianapolis.

“The False Claims Act is an important tool that allows private citizens to stop fraud against the taxpayers by initiating whistleblower lawsuits that states can investigate and join. It also deters future fraud to know that whistleblowers with courage in bringing a suit against large corporations that defrauded Medicaid will receive some share of the recovery as set out in the statute,” Zoeller said.

McKesson is a San Francisco-based wholesaler that buys prescription drugs from pharmaceutical manufacturers and resells them to health care programs such as Medicaid. A co-defendant in the lawsuits is a company in San Bruno, Calif., First DataBank Inc., that publishes the acquisition costs of thousands of types of prescription drugs. Medicaid relied upon First DataBank’s price lists to calculate the reimbursement amounts Medicaid paid pharmacies, physicians and clinics for prescription drugs it covered.

Under state and federal laws, Medicaid can pay no more for prescription drugs than the acquisition cost. The lawsuits alleged that McKesson and First DataBank colluded to artificially inflate the drug prices, thus causing Medicaid to overpay pharmacies and providers for thousands of different types of covered prescription drugs. Lawsuits brought by the federal government and states sought to recover the tens of millions of dollars Medicaid was overcharged between 2001 and 2009 when the scheme took place.

The joint settlement announced today resolves lawsuits against McKesson, which does not admit wrongdoing. First DataBank is not part of the settlement and litigation against it is ongoing. The $175 million multi-state settlement follows up on McKesson’s earlier settlement in April with the U.S. Department of Justice where it agreed to pay the federal government $190 million to resolve similar overcharging allegations. Medicaid is a state and federal program that funds health care for low-income people.

The overpricing scheme first was exposed when a private plaintiff filed a whistleblower lawsuit – called a qui tam lawsuit – in New Jersey that the federal government and states later joined. Under the state and federal versions of the False Claims Act, a whistleblower plaintiff is entitled to receive a percentage of any settlement in a qui tam lawsuit. The whistleblower in this case is expected to receive approximately $570,000 in McKesson’s settlement with the state, on top of the $3.3 million Indiana Medicaid will receive.

Under a public awareness campaign called “Blow the Whistle on Fraud,” Zoeller and deputy attorneys general from the AG’s Medicaid Fraud Control Unit (MFCU) have made a number of presentations to groups of health care workers, to educate them about their legal rights as whistleblowers under the False Claims Act.

Since January 2009, the AG’s Medicaid Fraud Control Unit has participated in 17 settlements of whistleblower lawsuits against pharmaceutical companies over allegations of illegal off-label marketing. Through those settlements, Indiana Medicaid has recouped approximately $35 million in recovery for drug-reimbursements wrongly paid out due to fraud against the program.

To learn more about how whistleblowers can file suit under the False Claims Act, visit this link:


Members of the public can report fraud against the Medicaid program or Medicaid patient abuse and neglect by contacting the Attorney General’s Medicaid Fraud Control Unit at (800) 382-1039.