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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
92
I. Average Wholesale Price Litigation
The following matters involve a drug reimbursement benchmark referred to as the “AWP” utilized by some
public and private payers to calculate at least some portion of the amount a pharmacy will be reimbursed for
dispensing a covered prescription drug.
A. In re McKesson Governmental Entities Average Wholesale Price Litigation
Commencing in May of 2008, a series of complaints were filed in the United States District Court for the
District of Massachusetts by various public payers — governmental entities that paid any portion of the price of
certain prescription drugs — alleging that in late 2001 the Company and First DataBank, Inc. (“FDB”), a publisher
of pharmaceutical pricing information, conspired to improperly raise the published AWP for certain prescription
drugs, and that this alleged conduct resulted in higher drug reimbursement payments by plaintiffs and others
similarly situated. These actions were all consolidated under the caption In re McKesson Governmental Entities
Average Wholesale Price Litigation. A description of these actions is as follows:
The San Francisco Action
On May 20, 2008, an action was filed by the San Francisco Health Plan on behalf of itself and a purported class
of political subdivisions in the State of California and by the San Francisco City Attorney on behalf of the “People
of the State of California“ in the United States District Court for the District of Massachusetts against the Company
as the sole defendant, alleging violations of the federal Racketeer Influenced and Corrupt Organizations Act
(“RICO,”) 18 U.S.C. § 1962(c), the California Cartwright Act, California's False Claims Act, California Business
and Professions Code §§ 17200 and 17500 and seeking damages, treble damages, civil penalties, restitution, interest
and attorneys' fees, all in unspecified amounts, San Francisco Health Plan, et al. v. McKesson Corporation, (Civil
Action No. 1:08-CV-10843-PBS) (“San Francisco Action”). On July 3, 2008, an amended complaint was filed in the
San Francisco Action adding a claim for tortious interference. On January 13, 2009, a second amended complaint
was filed in the San Francisco Action that abandoned all previously alleged antitrust claims.
The Connecticut Action
On May 28, 2008, an action was filed by the State of Connecticut in the United States District Court for the
District of Massachusetts against the Company, again as the sole defendant, alleging violations of civil RICO, the
Sherman Act and the Connecticut Unfair Trade Practices Act and seeking damages, treble damages, restitution,
interest and attorneys' fees, all in unspecified amounts, State of Connecticut v. McKesson Corporation, (Civil Action
No. 1:08-CV-10900-PBS) (“Connecticut Action”). On January 13, 2009, an amended complaint was filed in the
Connecticut Action abandoning all previously alleged antitrust claims.
On October 15, 2010, the Company executed an agreement to settle the Connecticut Action for $26 million. The
settlement, which was not subject to court approval, includes an express denial of liability and a release by the State
of Connecticut of the Company as to all matters alleged or which could have been alleged in the action. As a result,
during the second quarter of 2011, the Company recorded a $24 million pre-tax charge. On November 8, 2010, the
Court entered a Notice of Dismissal with prejudice in the Connecticut Action pursuant to the October 15 settlement
agreement. The Connecticut Action has thus concluded.
The Douglas County, Kansas Nationwide Class Action
On August 7, 2008, an action was filed in the United States District Court for the District of Massachusetts by
the Board of County Commissioners of Douglas County, Kansas on behalf of itself and a purported national class of
state, local and territorial governmental entities against the Company and FDB alleging violations of civil RICO and
federal antitrust laws and seeking damages and treble damages, as well as injunctive relief, interest, attorneys' fees
and costs of suit, all in unspecified amounts, Board of County Commissioners of Douglas County, Kansas v.
McKesson Corporation, et al., (Civil Action No. 1:08-CV-11349-PBS) (“Douglas County, Kansas Action”).