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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
93
The Company and HBOC answered the complaints in each of these actions, generally denying the allegations
and any liability to plaintiffs. In April 2007, we and other defendants filed motions for summary judgment in both
actions, arguing, in part, that plaintiffs could not as a matter of law prove the “materiality” elements of their fraud
and deceit causes of action. On December 13, 2007, the trial judge denied those motions. On January 3, 2008,
McKesson appealed those rulings to the Georgia Court of Appeals. On July 14, 2009, the Georgia Court of Appeals
issued its opinion, ruling as a matter of law that plaintiffs could not prove the materiality elements of their claims,
and further ruling that the trial court committed error in denying the defendants’ motions for summary judgment. On
July 23, 2009, plaintiffs petitioned the Georgia Supreme Court to take appeals from the Georgia Court of Appeals
decision. On October 19, 2009, the Georgia Supreme Court refused to take those appeals, and on December 15,
2009, the Georgia Supreme Court denied plaintiff’s petition for reconsideration of its October 19, 2009, order. The
Georgia Supreme Court remanded both cases to the Georgia Court of Appeals, which in turn remanded them to the
trial court with instructions to enter judgment in favor of McKesson and other defendants as provided in the Court of
Appeals’ July 14, 2009, decision. The only remaining matters to be decided in these actions, the claim of individual
plaintiff Green for indemnity relating to his defense in an unrelated action and fees and costs in both actions, were
resolved in a settlement dated April 28, 2010, and a dismissal of these two actions “with prejudice” will be filed in
May 2010.
II. Average Wholesale Price Litigation
The following matters involve a drug reimbursement benchmark referred to as the “AWP” utilized by some
public and private payors to calculate at least some portion of the amount a pharmacy will be reimbursed for
dispensing a covered branded drug.
A. Private Payor AWP Actions
On June 2, 2005, a civil class action complaint was filed against the Company in the United States District
Court, District of Massachusetts, New England Carpenters Health Benefits Fund, et al. v. First DataBank, Inc. and
McKesson Corporation (Civil Action No. 1:05-CV-11148-PBS) (the “Private Payor RICO Action”). Plaintiffs are
four health benefit plans. The complaint alleges that in late 2001 and early 2002 the Company and co-defendant
First DataBank, Inc. (“FDB”) conspired to improperly raise the published AWPs for certain prescription drugs, and
that this alleged conduct resulted in higher drug reimbursement payments by plaintiffs and others similarly situated.
Plaintiffs purport to represent a class of third party payors and consumers who paid any portion of the price of
certain prescription drugs to the extent their portion was based upon the AWPs published by FDB during the period
January 1, 2002, to March 15, 2005.
The complaint purports to state claims against the Company based on the federal Racketeer Influenced and
Corrupt Organizations Act (“RICO,”) 18 U.S.C. § 1962(c); California’s Business and Professions Code §§ 17200
and 17500 and common law civil conspiracy. The complaint also alleges two additional claims against defendant
FDB only for violation of California’s Consumers Legal Remedies Act, California Civil Code § 1750 and for
common law negligent misrepresentation. Plaintiffs seek injunctive relief, as well as compensatory and treble
damages, attorneys’ fees and costs.
On July 21, 2006, the plaintiffs filed a First Amended Complaint (“FAC”), asserting essentially the same claims
against the Company and adding an additional named plaintiff. The FAC also included an alternative count under
the consumer protection statutes of numerous states if the court determined that California law was not applicable to
the entire class. The FAC modified the definition of the alleged class to include third party payors (but not
consumers) whose pharmaceutical payments for certain prescription drugs were based upon AWP (not limited to the
AWP published by FDB) during the time period August 1, 2001, to March 15, 2005.