City of Providence Wins $400,000 Settlement Against Drug Company Accused of Wrongfully Inflating Prescription Drug Prices

Newly created Affirmative Litigation Unit protecting the health and safety of Providence residents.

Mayor Angel Taveras and City Solicitor Jeffrey M. Padwa announced today that the City of Providence has recovered $400,000 in damages from McKesson Corporation, a large drug wholesaler that was accused of wrongfully inflating prescription drug prices.

"The City Solicitor's office created an Affirmative Litigation Unit to protect the health and safety of the people of Providence and to recover funds in these difficult economic times," said Solicitor Padwa. "The $400,000 settlement is our first significant victory, but it won't be our last. We will continue to use the power of the law to improve the quality of life for our residents and to win justice for Providence taxpayers."

The settlement with McKesson Corporation came as a result of a class action lawsuit filed in federal court in Boston, Mass., and resulted in $82 million being paid to the effected parties.

The lawsuit alleged that McKesson, a large drug wholesaler, conspired to wrongfully inflate the Average Wholesale Price ("AWP") for prescription drugs. AWP is a benchmark price published by unnamed co-conspirator First DataBank, a publisher of drug data. Municipalities, public assistance programs and other entities that provide prescription drug benefits use the AWP to determine the amount of reimbursement to pharmacies for dispensing brand-name drugs to their program beneficiaries.

The lawsuit alleged that as a result of McKesson's and First DataBank's unlawful conspiracy, payors, including the self-insured City of Providence, overpaid for 400 brand-name prescription drugs for employees and retirees.