Jonathan Stempel
NEW YORK (Reuters) – A federal appeals court on Tuesday revived a whistleblower lawsuit that accused McKesson of providing free drug pricing tools to doctors to induce them to buy drugs from the company.
The 3-0 ruling by the 2nd U.S. Circuit Court of Appeals in Manhattan restored the legal claims of Adam Hart, a former McKesson business development executive, about tools to help oncologists increase profits from prescribed cancer drugs.
Hart said McKesson offered the tools as a kickback to doctors who agreed to make the Irving, Texas-based pharmaceutical distributor their primary wholesale supplier of brand-name and generic drugs.
The Florida man sued under the federal False Claims Act, saying the kickbacks tainted reimbursement claims submitted to Medicare and Medicaid and violated the U.S. Anti-Kickback Statute and similar laws in 27 states and Washington, D.C.
In his argument for the appeals court, District Judge Gerard Lynch said Hart failed to argue that McKesson intentionally violated the federal anti-kickback statute.
Hart’s allegations included that McKesson destroyed documents to hide its illegal behavior and that one executive emailed another about pricing tools and said, “You didn’t get this from me… okay?”
Lynch, however, said the lower court judge erred in concluding that Hart’s state-law claims, some of which do not require proof of willfulness, could survive only if the federal claim survived.
“The district court erred in dismissing Hart’s state law claims on the grounds that they were based solely on violations of the federal AKS,” Lynch wrote.
McKesson and his lawyers did not immediately respond to requests for comment. Hart’s lawyers did not immediately respond to such requests.
The appeals court remanded Hart’s case to U.S. District Judge Ronnie Abrams in Manhattan.
False Claims Act cases allow whistleblowers to sue on behalf of the federal government and receive a portion of the recovery. The US Department of Justice did not intervene in Hart’s case.
McKesson posted $2.21 billion in profit on $232.6 billion in revenue for the nine months ended Dec. 31.
The case is US ex rel Hart v McKesson Corp (NYSE:) et al., 2nd US Circuit Court of Appeals, No. 23-726.