Michigan sues 2 firms, alleging plot to inflate drug prices

Michigan Attorney General Bill Schuette has sued a giant drug wholesaler and a company that publishes a standard pharmaceutical price guide, alleging the pair conspired to inflate drug prices, costing the state Medicaid system millions of dollars.

The suit against San Francisco-based McKesson and First Databank, a division of Hearst, was filed last week in Ingham County Circuit Court. It alleges the two companies secretly conspired in 2001 to set prices for brand-name drugs at 5% over market price. The unwarranted price increases consequently affected the price of generic drugs, as well, according to the lawsuit.

Between 2001 and 2009, the Michigan Medicaid system spent more than $2 billion on brand-name and generic drugs at inflated prices, the lawsuit claims.

Schuette spokeswoman Joy Yearout said Monday that the specific amount of damages has not been determined, but could easily run into the millions of dollars.

McKesson and Hearst have been sued in multiple states by a variety of plaintiffs since 2005 over allegations of drug-price manipulation. A Connecticut Medicaid claim similar to the one Michigan officials filed was settled in 2010 for $15 million.

Two years earlier, McKesson announced that it had agreed to settle a lawsuit with insurers and consumers for $350 million and was setting up a reserve fund of $143 million to address government claims.

Representatives of McKesson and Databank were unavailable for comment Monday.