Virginia’s Case Against McKesson Heads to Trial

     SAN FRANCISCO (CN) – Jurors must determine whether Virginia knew that the prescription drug wholesaler McKesson was charging inflated prices, a federal judge ruled.
     The commonwealth sued McKesson in 2011, alleging McKesson inflated the average wholesale price of prescription drugs to extract higher payments from Virginia’s Medicaid program. The California-filed complaint alleges violations of the Virginia Fraud Against Taxpayers Act, which, like the federal False Claims Act, makes anyone who knowingly brings false payment claims against the commonwealth liable for civil penalties.
     The basis for McKesson’s defense is that Virginia knew its Medicaid program was overpaying pharmacies, yet allowed it to do so anyway.
     U.S. District Judge Susan Illston refused Friday to grant the drugmaker summary judgment on various issues.
     “The court concludes McKesson has raised genuine issues of material fact as to Virginia’s knowledge of the drug price inflation,” U.S. District Judge Susan Illston wrote. “The extent of Virginia’s knowledge as to ‘the actual true facts’ and the determination of whether Virginia actively approved of the underlying facts must be determined by a finder of fact at trial.”
     Illston declined to rule on whether the commonwealth’s claim under the Virginia Fraud Against Taxpayers Act is time-barred under California law. She also determined that a trial is necessary to determine whether Virginia benefited from the price rollback on the drugs and would be unjustly enriched by a damages award.

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