McKesson Corp (
Meanwhile, NACDS and FMI filed another brief in opposition to the controversial proposed First Databank settlement, although they overstate their arguments in a few places. Expect this battle to heat up over the next month as we get closer to the hearing about First Databank’s settlement.
McKesson: Without a Doubt
McKesson’s trial was scheduled to begin in December. You can view a presentation of selected evidence in the Plaintiffs’ Illustrative Exhibits in Support of Motion for Class Certification, which includes apparently damaging emails involving some familiar companies. Just keep in mind that this information was cherry-picked by the plaintiffs, so it is presented out of context and therefore may not be reliable.
Naturally, the settlement terms include “an express denial of liability of any kind.” (Read McKesson’s official statement.) The lead lawyer from the firm that filed the class action actually wrote a blog post about the settlement with his spin.
- future legal costs, plus
- the expected loss, where the expected loss = Probability of Losing * Total Damages.
If we assume $20 million in future legal costs and take the plaintiff’s original estimated damages of $5 billion, then the $351 million settlement implies a 6% probability of losing the case. Put another way, McKesson settled even though the numbers suggest a more than 90% chance of winning.
First DataBank: Cannot Predict Now
Read AWP: Dead Parrot or Just Resting? for my detailed overview about First Databank’s plans to unilaterally roll back the AWP for all drugs to 1.20 and discontinue publishing the Blue Book AWP data. This post is still valid because the next phase is a fairness hearing scheduled for mid-December.
Pharmacy groups object to the First DataBank settlement because a roll-back would translate into lost dollars for pharmacies that get reimbursed based on AWP. The National Association of Chain Drug Stores and the Food Marketing Institute recently filed a new brief and economic report opposing the amended June settlement.
Dr. Mosteller’s economic report (starting on page 21) highlights many issues that I have covered in my blog over that past few years, such as the reality that reimbursement relationships will be restructured to maintain dollar-based economic arrangements regardless of the benchmark. See PBMs and AMP (November 2007) or my original comments on the AWP settlement (October 2006).
Ask Again Later
The latest legal brief from NACDS and FMI perhaps overstates the Life Without AWP (LWAWP) issue when it says “no one has any idea as to what type of pricing benchmark will succeed it.” What, don’t they read Drug Channels?!? I’ve spent the past three years talking about a few likely candidates, including Wholesale Acquisition Cost (
One final thought that has been nagging at me. Pharmacies were apparently not involved in the alleged decision to increase the
Thanks to the concerned readers who inquired about the lack of posts last week. Alas, I was swamped with (paid) work, including a day testifying as an expert to a jury. I can’t write more about my expert testimony except to say that I had a lot of fun. You may rely on it.