Anoka County will represent Minnesota in a national class-action suit expected to be worth hundreds of millions of dollars, against companies accused of conspiring to inflate wholesale prices of medication prescribed for inmates and juveniles in detention centers.
A similar lawsuit against the companies involved -- McKesson Corp., a wholesale prescription drug supplier, and First Databank, a firm that determines wholesale drug prices -- has yielded a proposed settlement believed to be worth between $4 billion and $5 billion to the private sector, including insurance companies, said Jeffrey Bores, an attorney for Chestnut & Cambronne, the Minneapolis law firm hired Tuesday by Anoka County.
That suit was filed in 2006 in Boston and certified by a federal judge on behalf of consumers one year ago today. The pending public national suit, led by Massachusetts, which already has filed, is expected to yield a smaller settlement, but could still mean millions of dollars collectively for Minnesota taxpayers.
With insurance costs and prescription drug prices skyrocketing, Minnesota's 87 counties will be closely monitoring the class action.
All 87 counties would be eligible for settlement payoffs, as would the state, which covers the costs of prescription drugs in hospitals and for state prison inmates, Bores said. Anoka County is expected to file suit within the next five working days, he said.
Jerry Soma, Anoka County Human Services Division manager, explained the charges against the companies involved: "First Databank manipulated prices and McKesson would sell drugs at inflated prices."
Counties and states would then buy prescription drugs from local pharmacies, which had little to do with setting prices. For instance, Anoka County spent $1,267,000 on prescription drugs for inmates and juveniles in detention over a recent four-year period, Soma said. But Goodrich Pharmacy, the Anoka business that sold some of the drugs to the county, was unaware of a price-rigging scheme, said Goodrich manager Steve Simenson.
"We have zero input" on setting the wholesale prices, Simenson said.
All counties could benefit
Soma guessed conservatively that the county might reap $50,000 in a class-action settlement. But, he added, "This would be a benefit to all counties and the state."
When contemplating a class-action suit that could mirror the private-sector suit filed in 2006, Bores said his firm wanted a county in the metro area that "could work quickly"; they chose Anoka.
But the case could take years. Several law firms are expected to be involved, representing counties from many states, Bores said.
Although U.S. federal Judge Patti Saris ruled exactly one year ago in the private sector case that "plaintiffs have a persuasive argument that the alleged fraud had a class-wide impact" because average wholesale prices were increased, the value of a settlement in a public suit is anyone's guess.
There are 400 prescription drugs involved in the price-rigging scheme and it must be determined how much was spent on those particular drugs by each county and state involved in the suit. Not all of the $1.267 million that Anoka County spent between 2001 and 2005 on prescription drugs for prisoners were for those particular 400 drugs, Soma said. Those years were the period listed in the private sector suit.
But Anoka County, which hired Chestnut & Cambronne with the blessing of the County Attorney's Office, is more than willing to have records examined. Pursuing a settlement will come at no cost to the county, Soma said.
"It will take time to get organized," Bores said, "but given the state of health insurance and the cost of prescription drugs, this is significant."
Paul Levy • 612-673-4419