April 26, 2012 / 3:00 PM / 7 years ago

UPDATE 1-McKesson pays $190 mln in US drug pricing accord

* McKesson said to report inflated drug prices

* Medicaid said to be overcharged

* McKesson not immediately available for comment

* Shares of McKesson rise 0.5 percent

By Jonathan Stempel and Debra Sherman

April 26 (Reuters) - McKesson Corp, one of top U.S. drug wholesalers, has agreed to pay more than $190 million to settle claims that it had violated the federal False Claims Act by reporting inflated pricing information for many prescription drugs, causing Medicaid to overpay for them.

The settlement was announced Thursday by U.S. Attorney Paul Fishman in New Jersey.

According to the government, McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical products.

The government accused McKesson of marking up prices on a variety of drugs by 25 percent between Aug. 1, 2001, and March 31, 2005.

It said McKesson’s conduct had caused the United States and individual states to pay inflated reimbursements on Medicaid claims submitted between Aug. 1, 2001 and Dec. 31, 2009.

“We have no tolerance for those who take advantage of that system to bring in more business by falsely increasing reimbursements to retailers,” Fishman said in a statement.

McKesson was not immediately available to comment.

According to settlement papers, McKesson “expressly denies” the government’s charges, as well as those of a whistleblower, David Morgan, in a related civil lawsuit filed in New Jersey federal court. The San Francisco-based company did not admit liability or wrongdoing in agreeing to settle.

Fishman said state governments may negotiate separately with McKesson to resolve claims based on their shares of the Medicaid overpayments.

He also said federal and state governments had recovered more than $2 billion from drug companies alleged to have reported inflated pricing information.

Whistleblowers can receive 25 percent of settlement amounts in False Claims Act cases, depending on how much work they contribute.

Neither Morgan nor his lawyer could be immediately located for comment. Morgan filed his lawsuit in 2005, and added McKesson as a defendant in 2006. The case remains under seal.

In morning trading, McKesson shares rose 0.5 percent to $91.83 on the New York Stock Exchange.

The case is U.S. ex rel. Morgan v. Express Scirpts Inc et al, U.S. District Court, District of New Jersey, No. 05-01714.

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