District 37, AFSCME, AFL-CIO Lauds Proposed Landmark $350 Million Settlement Against Drug Wholesaler

Labor Union was key player in litigation.

The case was originally filed in 2006, when DC 37 along with a group of other plaintiffs claimed McKesson conspired with First DataBank, a drug publishing company, to fraudulently inflate the price of more than 400 prescription drugs by manipulating drug-pricing benchmarks.

The plaintiffs claimed the alleged scheme cost the union's plan, other third-party payers and consumers millions of dollars in inflated drug costs and co-pays.

"DC 37 is fighting a huge battle in trying to provide quality prescription drug coverage for our members," said DC 37 Executive Director Lillian Roberts. "It doesn't help when those within the industry make it more difficult by rigging the system."

The lawsuit was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the settlement is one of the largest of its type. If approved by the court, the total settlement amount will be distributed among third-party payers and consumers who paid cash or percentage co-pays. 

"We felt we needed to challenge McKesson and the others involved on behalf of our membership," Roberts noted. "We are very gratified that the suit we filed with the other plaintiffs will bring economic relief to many hard-working Americans, and other third-party payers."

"This case has been a long struggle and DC 37 has been fighting alongside us and the other plaintiffs since the beginning," said Steve Berman, lead attorney for the union and other plaintiffs. "DC 37 has been a great client to work with and we are grateful for their assistance and support throughout the litigation."

Plaintiffs claimed McKesson created the scheme to benefit and please key retail clients who might otherwise choose to purchase wholesale prescriptions from McKesson's competitors in the highly competitive wholesale arena.

Beginning in 2001 and through 2003, McKesson changed the markup on hundreds of brand name drugs from 20 percent to 25 percent as part of the scheme. As a result, retailers made a significant profit off the increased spread created by the McKesson-engineered scheme.