State accuses nation's largest drug wholesaler of artificially inflating prices

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By Catherine Holland By Catherine Holland

PHOENIX -- The state of Arizona is accusing the country’s largest drug wholesaler of deliberately inflating the prices of more than 400 brand-name prescription drugs.

Attorney General Tom Horne announced on Wednesday that the state has filed a complaint against McKesson Corporation alleging that they violated Arizona’s Consumer Fraud Act and cost consumers millions of dollars.

According to the complaint, McKesson’s executives developed a scheme in 2000 to mark up the average wholesale price of drugs like Allegra, Azmacort, Celebrex, Coumadin, Flonase, Lipitor, Neurontin, Nexium, Prevacid and Valium.

McKesson controls approximately one-third of the national wholesale drug distribution market, and supplies such retailers as Albertson’s, Costco, Wal-Mart and Target.

“In 2004 under this scheme, an additional McKesson markup of 5 percent of the drug Nexium could result in an added $100 million in profit based on $4 billion in sales of Nexium that year. Since this claim alleges markup irregularities on more than 400 drugs over multiple years, the consumer damages were enormous. We will ask the court to impose a penalty that recognizes the scope of the scheme,” said Horne.

The complaint is asking for civil penalties of up to $10,000 for each violation of the Consumer Fraud Act. It is also seeking restitution.