CHICAGO, IL â€” Illinois Attorney General Lisa Madigan announced today that Illinois will receive $10 million in a 30-state settlement against McKesson Corporation to resolve allegations that the company inflated pricing data used for setting Medicaid reimbursement rates for a large number of prescription drugs. The inflated data caused the stateâ€™s Medicaid program to overpay for those drugs.
Reimbursement rates for pharmaceutical drugs dispensed to Illinois Medicaid beneficiaries are set by a standard known as the â€œAverage Wholesale Priceâ€ (AWP), which is a benchmark used by most states including Illinois. Illinois alleged that McKesson, one of the largest drug wholesalers in the country, reported inflated AWP pricing data to First Data Bank (FDB), a publisher of drug prices, which meant that many of the AWPs used by Illinois to set reimbursement rates were inflated.Â
â€œThis company rigged the drug pricing system to boost its own earnings rather than report those costs fairly and accurately,â€ Madigan said. â€œPricing cases like this one are critical to ensuring that Illinois and federal Medicaid funds are being spent in the interests of the people who need medical care.â€
Todayâ€™s announcement of the statesâ€™ $151 million recovery was preceded by the federal governmentâ€™s April announcement of a $187 million settlement. As part of both the state and federal agreements, Illinois will recover a total of more than $23 million for the stateâ€™s Medicaid program.
The suit against McKesson was filed in the United States District Court in New Jersey. To date, Madiganâ€™s office has recovered more than $57 million from drug manufacturers that were alleged to have reported inflated AWP information to FDB and other publishers of drug prices.