McKesson 2008 Annual Report Download - page 98

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
91
From July 2006 through November 2007, the plaintiffs filed three amended complaints, which together sought
to add a class of consumers that made percentage co-payments (“consumer co-pay class”) for certain prescription
drugs and a class of uninsured consumers who paid usual and customary prices for the prescription drugs from
August 1, 2001 through the present (“U&C class”), to modify and extend the purported class period pertaining to
third party payors from August 1, 2001 to March 15, 2005, and to add an alternative count under various state
consumer protection statutes. The Company has responded to all amended complaints, denying the allegations and
asserting numerous affirmative defenses. No trial date has been set with respect to the third party payor class or
consumer co-pay class. Although the district court has not yet certified any alleged U&C class, a trial date of
January 26, 2009 is presently set with respect to the alleged U&C class.
On March 19, 2008, the district court denied a motion filed by the Company to dismiss and for judgment on the
pleadings with respect to the RICO claims asserted in the third amended complaint. Also on the same date, the
district court entered an order certifying: (1) a consumer co-pay class for all purposes for the period August 1, 2001
to May 15, 2005; (2) the third party payor class for liability and equitable relief for the period from August 1, 2001
to May 15, 2005; and (3) the third party payor class for damages for the period August 1, 2001 to December 31,
2003. Although the complaints do not specify the amount of damages sought for either of the two certified classes,
prior to the court’ s March 19, 2008 ruling plaintiffs filed a damages report claiming damages of $6.8 billion for the
third party payor class and $214 million for the consumer co-pay class, which in the case of the third party payors
represented damages for a period approximately sixteen months longer than the period certified on March 19, 2008
by the court. The plaintiffs will submit a new damages report which we expect will conform to the court’ s shorter
class period and other issues addressed in the opinion.
On April 2, 2008, the Company petitioned the U.S. Court of Appeals for the First Circuit to allow immediate
appeal of the district court’ s March 19, 2008 class certification order. Plaintiffs’ filed a response to the petition on
April 14, 2008. The First Circuit has not yet acted on the petition.
On December 10, 2007, the same plaintiffs named in the New England Carpenters I civil action filed a civil
class action complaint under federal and state antitrust laws against the Company in the United States District Court,
District of Massachusetts, captioned: New England Carpenters Health Benefits Fund et al., v. McKesson
Corporation, (Civil Action No. 1:07-CV-12277-PBS) (“New England Carpenters II”). The New England
Carpenters II action purports to be brought on behalf of the same three classes and is based on the same set of
operative facts as the New England Carpenters I action. The Complaint purports to state claims against the
Company for violation of the Sherman Act, 15 U.S.C. § 1, California Business & Professions Code § 16700 et seq.,
and Antitrust Laws for Indirect Purchasers for seventeen individual states. Plaintiffs seek declaratory relief, as well
as actual and treble damages, attorneys’ fees and costs in unspecified amounts. The Company moved to dismiss the
complaint in New England Carpenters II on January 31, 2007. That motion was argued, but not decided, on April
17, 2008. At the conclusion of the hearing, the court stayed further activity in the case. McKesson has not yet
answered the complaint. No trial date or pretrial schedule has been set.
In June 2007, the Company was informed that a qui tam action by an unknown relator was previously filed in
the United States District Court in the District of New Jersey, purportedly on behalf of the United States, twelve
states (California, Delaware, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Mexico, Tennessee,
Virginia and Texas) and the District of Columbia, against the Company and seven other defendants unaffiliated with
the Company. The Company was advised that the United States and the various states are considering whether to
intervene in the suit, but none has done so to date. The suit thus remains inactive and under seal, and the suit has not
been served on the Company. The Company was informed further that an amended complaint filed under seal in
this matter alleges multiple claims against the Company and several other parties, including claims under the federal
False Claims Act and the various states’ and District of Columbia’ s false claims statutes. The claims arise out of
alleged manipulation of AWP by defendants from 1993 through at least 2005, which the plaintiffs claim caused
them to pay more than they should have in reimbursement for prescription drugs covered by various government
programs that base reimbursement payments on AWP. The complaint seeks damages on behalf of the United States,
the twelve named states and the District of Columbia, including treble damages and civil penalties as provided under
the various False Claims Act statutes, as well as attorneys’ fees and costs, all in an unspecified amount. The
Company has been cooperating with the investigation.