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California and 28 other states have reached a $151 million settlement with McKesson Corp., one of the country’s largest drug wholesalers, in a lawsuit alleging the company inflated inflated prices of hundreds of prescription drugs, costing the states’ Medicaid programs millions in overpayments. The suit with San Francisco-based McKesson Corporation alleged that McKesson deliberately inflated drug prices by as much as 25% from 2001 to 2009. The federal government settled its portion of the lawsuit in April for more than $187 million.

An investigation by state and federal agencies found that McKesson overbilled for more than 1,400 brand-name drugs from 2001 to 2009. They include commonly prescribed medications such as Adderall, Allegra, Ambien, Celexa, Lipitor, Neurontin, Prevacid, Prozac and Ritalin, officials said.

California will receive about $24 million of the settlement, said state Attorney General Kamala Harris. That money will go to the state Medicaid program, not recipients.

McKesson Corporation proclaimed its innocence.

McKesson representative Kris Fortner said the claims against the company are without merit, but “given the inherent uncertainty of litigation, we determined that this settlement was in the best interest of our employees, customers, suppliers and shareholders.”

“We did not manipulate drug prices and did not violate any laws,” Fortner said.

The settlement results from a 2005 whistleblower lawsuit that was filed under federal and states’ false claims statutes. The suit alleged that McKesson inflated average wholesale prices reported to First Data Bank, which many state Medicaid programs use to set payment rates for pharmaceutical reimbursement.

New York will receive the largest share of the states’ settlement, $36 million, according to officials with state Attorney General Eric Schneiderman’s office.

“Pharmaceutical distribution companies are not above the law. This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits,” Schneiderman said.

In addition to California, New York, and the District of Columbia, the following states, in alphabetical order, are covered in the settlement: Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming.

-Bill at

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