Public Employee Press

Court approves $350 million settlement in drug fraud case

Under a recent federal court ruling against a price-fixing scheme, the DC 37 Health & Security Plan will seek millions of dollars for the excessive amounts it paid for drugs on behalf of members and retirees.

On Aug. 3, the U.S. District Court in Massachusetts approved a $350 million settlement of a drug fraud lawsuit in which the plan played a leading role.

The $350 million is to compensate consumers, drug plans and self-insured employers who were victims of a price-gouging scheme involving 386 widely used prescription drugs.

DC 37 members and retirees cannot get direct compensation, because they make fixed co-payments regardless of the price of their prescriptions, but the plan can go after a share of the $288 million that is to be divided among union benefit funds and self-insured employers.

“Our victory put the pharmaceutical industry on notice that there are watchdogs that are going to bite them real hard if they use fraud to boost their bottom line,” said Cynthia Chin-Marshall, administrator of the DC 37 plan.

The lawsuit charged that the drug wholesaler, McKesson Corp., one of the largest U.S. health-care firms, conspired with pharmaceutical industry publishers to jack up the figures in wholesale price lists used by retailers to set sales prices.

The rip-off hit popular drugs such as Allegra, Ambien, Celebrex, Claritin, Coumadin, Lipitor, Plavix, Prevacid, Prilosec, Valium and Zantac. DC 37 filed the suit with three other union members of the Boston-based watchdog group Prescription Access Legislation, a nationwide coalition of senior, labor and consumer groups.

“This settlement is the largest class-action lawsuit on price fraud ever brought against a major drug company,” said attorney Audrey Browne, who represented the union plan in the case. Hagens Berman Sobol Shapiro, one of the most experienced law firms in the country in public-interest litigation, worked on behalf of the union plans.

“We are very proud to have fought a successful fight for the interests of consumers and drug plans,” said Browne.

In related litigation involving co-defendants FirstDatabank and MediSpan, the federal court approved two settlements on March 17 that call for a rollback in the prices of the 386 brand-name drugs in the fraudulent pricing scheme.