One of the country's largest pharmaceutical wholesalers will pay Virginia $37 million as part of a settlement announced by Virginia Attorney General Ken Cuccinelli on Friday.
McKesson Corporation will pay the fine over allegations that the company violated Virginia's Fraud Against Taxpayers Act, by inflating prices for over 400 prescription drugs on the market.
"This $37 million recovery shows that we will not tolerate Medicaid fraud in Virginia," Cuccinelli said. "It robs the taxpayers and it robs money needed for medical services for the poor. Our office refused to participate in a national settlement led by the Department of Justice because we needed to send a message that Virginia will fight to protect its Medicaid program from fraud and because the original settlement didn't cover the total loss to our Medicaid program."
The attorney general had alleged that McKesson inflated the average wholesale price information, causing the state's Medicaid program to overpay for certain drugs. The Commonwealth's Department of Medical Assistance Services uses data from the wholesale price index to set reimbursement rates.
"Our Medicaid Fraud Control Unit, working with the Virginia Department of Medical Assistance Services, was willing to go to trial in McKesson's hometown of San Francisco to get the maximum possible recovery we could in this case," Cuccinelli said in a conference call Friday with media. "Due to these efforts, we estimate that this $37 million recovery represents approximately ten times what other states that had a comparable impact to their Medicaid programs received from the previous, multistate settlement."
A total of $16.8 million will go to the state's General Fund Health Care account in the next two weeks. That portion is for compensatory damages for Virginia's Medicaid program, with another $13.5 million coming as penalties.
Cuccinelli's office estimates that a total of $1.6 billion in Medicaid fraud has been recovered in the last three and a half years.
The settlement counts as the largest recovery by any state's Medicaid Fraud Control Unit against McKesson. In a previous settlement, which Virginia refused to join, 29 states, including California and New York, shared a total recovery of $151 million.