Connecticut sues McKesson on racketeering charges

By Scott Malone

BOSTON, May 28 (Reuters) - The state of Connecticut sued McKesson Corp (MCK.N: Quote, Profile, Research) on Wednesday on charges that the drug wholesaler violated anti-racketeering laws by conspiring to artificially inflate the wholesale prices used to determine payments by private and public insurance plans.

The suit, filed in U.S. District Court in Boston, alleges that McKesson and publishing company First DataBank conspired to expand to 25 percent from 20 percent the difference between the price retailers paid for prescription drugs, known as the wholesale acquisition cost, or WAC, and average wholesale price, or AWP.

The suit cites First DataBank as a co-conspirator.

It alleges that First DataBank, which publishes directories of drug prices, in late 2001 agreed to increase the AWP figures regardless of actual market prices. That made it more profitable for retailers to sell drugs distributed by McKesson, according to the suit.

"To conceal the scheme, McKesson and First Data agreed to typically effectuate price changes only when some other WAC-based price announcement was made by a drug manufacturer," the suit said.

In addition to civil racketeering charges, the suit alleges that San Francisco-based McKesson violated federal anti-trust laws and Connecticut fair trade laws. It seeks monetary damages in compensation for the higher reimbursement rates for McKesson-distributed drugs paid out by Connecticut state health programs.

A McKesson spokesman was not immediately available for comment.

This is not the first time McKesson has been sued over the pricing issue. The New England Carpenters Health Benefits Fund sued McKesson and First DataBank in Boston over this issue in 2005. In August, that suit was granted class-action status.

Connecticut said in court papers that it filed its suit in Boston federal court due to the related cases being heard there. (Editing by John Wallace)